Bauc: A budget amendment may be necessary
If a pessimistic scenario materialises, revision of this year's budget law may be necessary, Finance Minister Jaroslaw Bauc said in an interview for Rzeczpospolita daily. Asked what are the assumptions of such a scenario, Bauc said that the whole year's economic growth would have to be at just 2%-2.5% or at the level estimated for the first quarter of 2001 (the budget law assumes 4.5% growth) and average annual inflation should fall to 6%-6.2% (6.6% was set in the budget law). According to Bauc's calculations, nominal GDP would be then 3% or around PLN 25bn (USD 6.25bn) lower than planned. If in addition the zloty remains strong until the end of the year, there will be problems with budget implementation even if there are large-scale spending cuts. Then, a revision of the budget law might also be necessary, Bauc said. "I am sure, however, that we are closer to a more positive scenario with 3.8% GDP growth and 6.2% annual inflation", the minister said, but added that this would be possible only if the zloty falls in the second half of the year as expected. As far as the currency is concerned, Bauc repeated that he did not see any justification for the current strength. Bauc also said he would like the Monetary Policy Council (RPP), which is starting its meeting today, to cut interest rates by 250 basis points until the end of the year. Bauc stressed also the danger of creating expectations of interest rate cuts, which support demand for PLN-denominated securities and consequently the zloty. kp, bb
Źródło:IntelliNews Daily
