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POLAND TO BECOME THE NEXT GREECE? [28]
interests of the Polish people?
Polish Prime Minister Donald Tusk, who probably won yesterday's general election, and must now focus on cutting the budget gap to reverse a zloty plunge as investors shy away from Poland.
PO has pledged to narrow the deficit to 2.9 percent of gross domestic product IN 2012, counting on 4 percent economic growth to boost revenue."The budget for next year must be made more realistic, this one is too optimistic, as the cycle of uncertainty that surrounds PL.
The zloty has slumped about 9.5 percent against the euro this year as investors shy away from emerging markets and on concern Europe's debt crisis will slow economic growth.
The International Monetary Fund is forecasting 3 percent growth and Citigroup Inc. is predicting just 1.9 percent expansion in Poland, the only member of the 27-nation EU to avoid recession during the global financial crisis.The budget deficit soared to 7.9 percent of GDP last year and public debt is near the threshold of 55 percent of GDP, a level that would trigger mandatory austerity measures.Controlling public finances will be the greatest challenge for the administration that emerges from the election. The general government deficit soared to 7.9 percent of gross domestic product in 2010, exceeding the EU's 3 percent limit for a third consecutive year.
The zloty's tumble sent local-currency government bonds down 15.7 percent in dollar terms last quarter, the third-worst returns worldwide after Greece and Hungary, according to indexes of debt due in more than one year compiled by the European Federation of Financial Analyst Societies and Bloomberg.
Poland, a country of 38 million people, was the biggest net recipient of EU funding in the bloc's 2007-2013 budget, getting 67 billion euros ($97 billion) in aid to iron out differences between richer and poorer states.The funding, which helped the Polish economy grow 4.4 percent a year in 2007-2010, may be cut if the country doesn't reduce its deficit to within the EU limit of 3 percent of gross domestic product next year from 7.9 percent in 2010.The EU aid has added an average of 1.5 percentage points to economic growth each year, according to Poland's Regional Development Ministry, and remains essential for economic expansion as budget cuts may limit consumer demand and public investment.
PO is now caught between a rock and a hard stone, implement austerity measures immediatly to reduce the debt or risk losing EU funding.
