Poland's budget deficit is expected to reach zł.40.2 billion next year, down from zł.50.2 billion planned for this year, according to the government’s new budget, which was passed on Friday.

The government also expects gross domestic product growth at 3.5 percent in 2011, while it was set at three percent in the budget for 2010, which means GDP will amount to nearly zł.1.5 trillion. The new budget also forecasts income at zł.272.1 billion, up from zł.249 billion, while spending should amount to zł.312.3 billion, more than zł.301.2 billion planned for this year.

The budget also suggests the average monthly wage should increase by 1.4 percent in real terms to zł.3,359 next year, and unemployment should drop from 12.3 to just 9.9 percent.

In order to make this all possible, a number of costs to the citizen lie ahead. Among them, the one percentage point VAT increase to 23 percent on goods and services, and excises on cigarettes, which the government said it will increase by four percent.

Meanwhile, salaries in the public sector are set to remain stable, with the exception of the pay checks of teachers, who were promised a wage rise. “

This is a fairly ad hoc budget. It is intended to not allow next year’s public debt to exceed 55 percent of GDP [which would trigger constitutionally mandated spending cuts],” said Invest Bank’s head economist Jakub Borowski.

Poland AM