Government adopts 2016 budget
PR dla Zagranicy
Jo Harper
08.09.2015 07:19
The government on Monday approved a draft for the 2016 budget with proposed increases in spending leading to a forecast deficit of PLN 55 billion (EUR 12.9 billion), though this will not exceed the EU’s three percent of GDP limit.
The draft budget plans for revenues of PLN 296.88 billion (EUR 70.1 billion) and spending of PLN 351.50 billion (EUR 82.9 billion) next year, with a resultant budget deficit of just over PLN 54.6 billion (EUR 12.9 billion).
This is based on the assumption of 3.8% real GDP growth in 2016 and inflation of 1.7 percent. It is also expected that national wages will rise by 3.6 percent during 2016.
Poland was taken out of the excessive deficit procedure by the European Council earlier this year following a reduction in the deficit to below the three percent of GDP threshold. This threshold is not expected to be exceeded in 2016.
Interest payments on debt in 2016 are forecast to be PLN 0.5 billion (EUR 0.12 billion) lower than in the current year.
Plans for spending increases
Among expenditures, defence will rise by PLN 3 billion (EUR 0.7 billion) as a result of Poland’s commitment to spend two percent of GDP on defence, while at least PLN 900 million (EUR 210 million) will be spent on continuing to restructure the coal mining sector.
Welfare spending will also increase, with PLN 1 billion (EUR 0.24 billion) allocated to higher family benefits and PLN 1.4 billion (EUR 0.33 billion) as the cost of a one-off increase in retirement payments.
Increasing public sector wages, which have been frozen since the start of 2010, will cost an additional PLN 2 billion (EUR 0.48 billion).
Not austere enough?
Professor Stanisław Gomułka, chief economist of the BCC (Business Center Club), commented that the expected deficit for 2016 is higher than in previous plans for the budget, which he attributes to pressure from looming parliamentary elections in October.
“The one positive thing which may be said about this proposition is that the government does not intend to exceed the maximum allowed public sector deficit… However this is a step backwards from the initial plan of reducing the deficit to around one percent [of GDP] during the next few years,” he explained.
Meanwhile Dr. Dariusz Woźniak from the Business School of Nowy Sącz University noted a lack of long term measures for reducing the budget deficit further.
The draft budget is expected to be sent to the lower house of the Parliament, the Sejm for debate towards the end of this month. (sl/jh/di)
Source: PAP, IAR