WARSAW: Deputy Finance Minister Hanna Majszczyk has rejected calls by the opposition to revise assumptions in Poland’s 2017 budget, despite fears that growth and revenue projections are too optimistic. The budget assumes GDP growth of 3.6 percent in 2017. Under this scenario, the budget deficit would only just meet the EU’s deficit target. Weaker growth in 2017 could cause Poland to miss this target. The Central Statistical Office (GUS) has estimated that the Polish economy grew by 2.5 percent in the third quarter of 2016.
Many economists had expected GDP growth of around 2.9 percent. The last time the Polish economy grew less than 3 percent was at the end of 2013. Meanwhile, Moody’s rating agency lowered Poland’s 2017 GDP growth forecast to 2.9 percent earlier this month, citing a “slowdown in global and regional growth, investment and trade.”
Majszczyk, however, pointed to current inflation forecasts, saying: “The assumption in the budget that inflation will be 1.3 percent is in turn lower than the current market consensus of around 1.5 percent.” According to the deputy minister, the higher-than-expected inflation in 2017 could cancel out the effect of lower-than-expected GDP growth on revenue. Majszczyk also argued that plans to eliminate the under-the-counter, unregistered sector of the economy and close off VAT loopholes would bring in additional revenue. The current draft 2017 budget forecasts a deficit of PLN 59 billion (EUR 13 billion), which would be equal to 2.9 percent of GDP if the government’s assumption about growth proves true.
