Prime Minister Donald Tusk pushed hard for the budget cuts, but not everyone is pleased Courtesy of KPRM

After pressuring members of his cabinet to slash expenditures in order to fill a budget gap, Prime Minister Donald Tusk last week announced that cuts of zł.19.7 billion would be made. He had originally asked for zł.17 billion.

Around zł.10 billion of savings was found among central and regional administrations, while the rest is expected to come via a new means of financing road construction – through foreign loans and bond issues.

The government’s sudden quest for savings was caused by the fact that the 2009 budget was predicated on the assumption that GDP growth in 2009 would amount to 3.7 percent, a figure deemed over-optimistic even before the budget was approved. As the belief that Poland would escape the effects of the global economic slowdown proved unrealistic, PM Tusk was forced to seek emergency cuts within the ministries. The initial zł.17 billion estimate was calculated based on a 2009 GDP growth prediction of 1.7 percent.

An emotional issue

The cuts appear to have been made, but not without difficulty. “Of course there were emotions. In some of the ministries this work required remarkable determination. But we can call it a happy ending … All ministers that were looking for savings have met their obligations,” PM Donald Tusk announced last week.

No explanation was given as to why the government allowed such an optimistic budget to pass in the first place. Nor was the reason for the procrastination in dealing with the issue revealed.

Finance Minister Jacek Rostowski refused to expand the predicted 2009 budget deficit beyond zł.18.2 billion, partly because this could jeopardize Poland’s plans to enter the euro zone in 2012. Instead, the government will sell bonds worth zł.155 billion.