|Prime Minister Donald Tusk|
Courtesy of KPRM
In a budget amendment that the government plans to prepare in August, the deficit will be increased by zł.16 billion, Prime Minister Donald Tusk said at a press conference on Tuesday. This change, plus spending cuts of about zł.8.5-8.6 billion made by particular ministries, is necessary as budget revenues came in at zł.24 billion less than was expected.
Mr Tusk explained that because the European crisis has an increasing influence on Poland, the government is making counter-cyclical decisions. “They are aimed at stimulating the economy in this particularly critical time,” he said. “That is because we believe that 2013 is a critical year and that 2014 … should be a year of revival,” he added.
Mr Tusk also said that the government had approved an amendment to the law on public finances. The amendment would suspend the 50 percent debt-to-GDP threshold (which when breached requires certain fiscal tightening measures) in 2013 and 2014. A spending rule that allows for expenditure growth at only one percent plus inflation will also be suspended.
“At the same time we are about to complete work on a large draft law regarding a new spending rule, which should come into force still this year” Mr Tusk said.
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