Tuesday, May 22nd, 2012
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BY Andrew Kureth
Andrew Kureth, WBJ editor-in-chief READ MORE
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52.2 billion złoty – that is the Finance Ministry's estimate of Poland's budget deficit next year, nearly twice what it is this year. The figure inches towards some 7 percent of GDP, far higher than the 3 percent limit mandated by the European Union.
The media are bursting with outrage and amazement. Was this not the same government that purported to be fiscally responsible? That only a few months ago was assuring us that we would be entering the ERM-II pre-euro zone waiting room in the second half of this year?
Interestingly however, analysts seem unsurprised and un-alarmed. As the global economic crisis deepened and continued to affect Poland, everyone was sure the country's budget deficit would grow sharply over this year's. And taking Poland's growth this year into account – as likely the only EU country to avoid recession – such a high deficit seems a small price to pay for relative economic prosperity.
Indeed, many analysts believe the FM has overshot the mark, purposefully underestimating economic growth next year, in order to bring the deficit in even lower during a presidential election year, allowing PM Tusk – who will certainly run for president – to claim that things are better than had been predicted.
Still, the announcement brings into question the government's credibility. When it was telling us earlier this year that we would be entering ERM-II, few bought it, and no one was worried when it didn't happen. The same now goes for these vastly upwards-revised budget figures. When we know the government isn't telling us the truth, why isn't anyone calling them on it? Why aren't PO's poll numbers dropping dramatically?
Part of the reason is that there are very few options to choose from – practically no one expects that PiS or SLD, the other viable parties in the Parliament, would do much better with Poland's fiscal headaches. Next week's cover story in WBJ (available in stores Monday, September 14) will examine this phenomenon. The PO-PSL government has promised much and delivered little, with its inability to sell off the country's distressed shipyards to a foreign investor being the latest example. Still, PO currently looks well-placed to hang on to power.
And one final note: This week WBJ is pleased to announce the publication of Investing in Poland 2010, a new annual publication on the investment climate in Poland's cities and regions, with special sections on Poland's macroeconomics, its Special Economic Zones and its Technology Parks. It is simply an essential resource for anyone with an investment in Poland, or considering locating one here. Investing in Poland 2010 will be available starting tomorrow at the Economic Forum in Krynica, and thereafter at shops and kiosks across the country, as well as at embassies, consulates, chambers of commerce and via WBJ.pl.
52.2 billion złoty – that is the Finance Ministry's estimate of Poland's budget deficit next year, nearly twice what it is this year. The figure inches towards some 7 percent of GDP, far higher than the 3 percent limit mandated by the European Union.
The media are bursting with outrage and amazement. Was this not the same government that purported to be fiscally responsible? That only a few months ago was assuring us that we would be entering the ERM-II pre-euro zone waiting room in the second half of this year?
Interestingly however, analysts seem unsurprised and un-alarmed. As the global economic crisis deepened and continued to affect Poland, everyone was sure the country's budget deficit would grow sharply over this year's. And taking Poland's growth this year into account – as likely the only EU country to avoid recession – such a high deficit seems a small price to pay for relative economic prosperity.
Indeed, many analysts believe the FM has overshot the mark, purposefully underestimating economic growth next year, in order to bring the deficit in even lower during a presidential election year, allowing PM Tusk – who will certainly run for president – to claim that things are better than had been predicted.
Still, the announcement brings into question the government's credibility. When it was telling us earlier this year that we would be entering ERM-II, few bought it, and no one was worried when it didn't happen. The same now goes for these vastly upwards-revised budget figures. When we know the government isn't telling us the truth, why isn't anyone calling them on it? Why aren't PO's poll numbers dropping dramatically?
Part of the reason is that there are very few options to choose from – practically no one expects that PiS or SLD, the other viable parties in the Parliament, would do much better with Poland's fiscal headaches. Next week's cover story in WBJ (available in stores Monday, September 14) will examine this phenomenon. The PO-PSL government has promised much and delivered little, with its inability to sell off the country's distressed shipyards to a foreign investor being the latest example. Still, PO currently looks well-placed to hang on to power.
And one final note: This week WBJ is pleased to announce the publication of Investing in Poland 2010, a new annual publication on the investment climate in Poland's cities and regions, with special sections on Poland's macroeconomics, its Special Economic Zones and its Technology Parks. It is simply an essential resource for anyone with an investment in Poland, or considering locating one here. Investing in Poland 2010 will be available starting tomorrow at the Economic Forum in Krynica, and thereafter at shops and kiosks across the country, as well as at embassies, consulates, chambers of commerce and via WBJ.pl.
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