The key component of the zł.91.3 billion package, which covers the 2009-2010 period, will be an increase of guarantees for the interbank market. The government also declared that it would raise the limit of state guarantees for corporate credit to zł.40 billion, up from zł.15 billion.
Absorption of EU funds will also be accelerated and investments in renewable energy sources increased. In addition, the plan includes a zł.2 billion injection for the Bank Gospodarstwa Krajowego, a state bank specializing in the financing of governmental programs. This should allow the bank to raise its credit guarantees for SMEs to around zł.20 billion.
To balance the budget deficit, the government said it would cut state expenditures by zł.1.7 billion. It did not detail where such cuts would be made, but it was revealed that excise tax on alcohol and imported cars with engines larger than two liters will be increased.
These funds will support the so-called "social solidarity reserve" - a zł.1.14 billion fund to protect Poland's poorest citizens from the impact of the crisis. The government will also enable the energy regulator to set a cap on maximum energy prices in order to protect Poles from growing energy prices.
A taxing reminder
In unveiling its plan, the government also reminded the press that income tax will be lowered at the start of 2009, with the current three tax brackets reduced to two. Taxes will reach 18 percent for people earning up to zł.85,500 per year, and 32 percent for those who earn above that figure. The present tax rate is 19 percent for those who earn up to zł.44,500 per year, 30 percent for those earning up to zł.85,500 and 40 percent above that level.
The government will also reform the VAT system. The overall tax reform program will save Poles an estimated zł.10 billion.
Cautious optimism
Jarosław Górski, an expert at the Sobieski Institute, was cautiously optimistic about the plan. He said that it was a positive sign that the government had reacted to the situation.
"Still, the plan does not seem to be aimed at counteracting the crisis. Instead, it includes things that should have been carried out long ago," he said.
Another problem is that the plan lacks concretes. "This is rather a strategy of communication with the market," he said, adding that some issues included in the plan should not be mentioned as a strategy for the crisis at all. "This concerns increased absorption of EU funds, for example. It is better not to give the impression that these funds are being used to counteract the crisis," Górski said.
GDP downsized
Along with introducing the stability plan, the government also cut its GDP forecast for 2009. It now estimates Poland's 2009 GDP growth will reach 3.7 percent, down from 4.8 percent. Other forecasts were left unchanged, however, such as the inflation rate (2.9 percent) and the budget deficit (zł.18.2 billion).
"We are not an isolated island and we shall feel the influence of the global crisis," Finance Minister Jacek Rostowski told the press.
Prime Minister Donald Tusk added, however, that despite the lower GDP projection, the Polish economy remains stronger than other economies in the region. In Q3, the Polish economy saw 4.8 percent y/y growth, while the Q1-Q3 period saw 5.5 percent y/y growth.
"We should look at the Polish economy with moderate optimism," Tusk said.
