11/16/2006

EU warns Poland of 2007 budget deficit

Poland is not taking sufficient actions to bring its budget deficit below the European Union(EU) limits next year, warned the European Commission on Tuesday.

According to the draft budget of Poland for 2007, the deficit is expected to reach 3.7 percent, taking into account the costs of pension reform, but the European Commission forecast that it might turn out slightly higher, standing at 4 percent of the Polish gross domestic product (GDP). Either figure is above the 3-percent limit set by EU rules.

The European Commission said in its recommendation to the EU Council that Poland should make more ambitious efforts to consolidate its public finances given its strong economic growth at the moment.

"This is in the interests of the Polish economy and people, irrespective of the target date that is set for the adoption of the euro," said Joaquin Almunia, European commissioner for Economic and Monetary Affairs.

Poland recently reported a deficit of 2.5 percent of the GDP in 2005 and expects a deficit of 2.1 percent this year. The draft budget for 2007 set the deficit at 1.7 percent.

However, these figures did not take the country's pension reform into accounting, which was allowed under a transitional arrangement. As the agreement is set to expire on April 1, 2007, under the new accounting which incorporates pension reform costs, the deficit figure would stand at 3.7 percent in 2007.

EU finance ministers are likely to vote on the Commission's recommendation when they meet again on Nov. 28.

Source: english.people.com.cn



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