The economic slowdown in Poland looks likely to push public debt even higher next year, but the 2010 budget gap should still fall short of 55 percent of GDP, according to the Deputy Head of the Finance Ministry's debt department Anna Suszyńska.

Many analysts are concerned that the 55-percent figure could be reached and surpassed as early as next year. However, the Finance Ministry continues to stand by its prediction, despite the rise in borrowing needs and the central budget deficit, that it will be able to effectively manage rising of debt levels and keep it under 55 percent.

“The updated debt management strategy contains these forecasts of public debt to GDP. In 2009, we have 49.8 percent and in 2010, 54.7 percent,” Ms Suszyńska told Reuters.

The Polish government is trying to stem the spiraling debt through its privatization program, which has already begun, but the figure also rests with the strength of the złoty, as much of the country's debt is held in foreign currencies.

“The scale of the debt rise will largely depend on the złoty and privatization revenues. If the złoty continues its appreciation, the finance ministry's forecasts are realistic,” said Piotr Bujak, a senior economist at Bank Zachodni WBK. (JJ)

Source: Thomson Reuters