Polish govt sets 2008 budget deficit, revenues

Polish govt sets 2008 budget deficit, revenues - govt source UPDATE

	Published : Mon, 11 Jun 2007 16:56 By : Agencies Print this Story

WARSAW (Thomson Financial) - Poland's ruling conservatives will keep the budget deficit at 30 bln zlotys for the second year running in assumptions for the 2008 budget, cutting the deficit further as a percentage of GDP, a government source said today.

In the assumptions, to go to cabinet tomorrow, the finance ministry has upped its forecast for economic growth to 5.7 pct for next year and set budget revenues at 241.6 bln zlotys, the source told Thomson Financial News.

Warsaw has steadily cut its public sector shortfall over the last five years, but was told earlier this year by Brussels that it must do more to meet the bloc's 3 pct ceiling, also one of the criteria for adopting the euro.

This year's planned 30 bln deficit is expected to correspond to around 3.6 pct of GDP.

Under Polish law, the finance ministry must present the 2008 budget assumptions to the government by mid-June. Analysts expect market-favoured Finance Minister Zyta Gilowska will then face an extended battle to face down spending demands from the conservatives' populist coalition partners.

The economy in the country of 38 mln has boomed since EU entry, surging to 7.4 pct growth - its fastest in a decade - in the first quarter.

After the central bank raised interest rates for the first time in three years in April, the ministry forecasts average base borrowing costs will rise further next year to an average of 4.7 pct. The bank's main rate now stands at 4.25 pct.

It forecast inflation at 2.3 pct, compared to 2.3 pct in April. The figures also predicted unemployment would fall to an average of 9.9 pct in 2008 - the first time it would have reached single figures since the late 1990s.

pawel.sobczak@thomson.com +48 22 447 2430

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Polish govt sets 2008 budget deficit, revenues - govt source UPDATE