The Polish finance ministry changed its macroeconomic forecasts for 2006, raising the expected rate of economic growth from 4.0% to 4.3%. The ministry also lowered the expected inflation rate from 1.5% to 1.0%, according to the daily newspaper Gazeta Wyborcza.
The change is surprising as recently the Finance ministry had lowered the projected economic growth rate for this year from 3.5% to 3.3%, while analysts had rather expected upping the inflation forecast so it would be easier to make the next year's budget balance (higher inflation means higher revenues for the budget).
The newspaper also reported that the finance ministry cut the expected expenses next year by PLN 1.05bn. However, to compensate for higher expenses resulting from paying back the VAT on construction materials, estimated at PLN 1.6bn, the ministry will raise the excise tax on alcohol, cigarettes, petrol and other fuels. The amount of the hike is not known yet, but the increase might bring a total of PLN 1bn, the newspaper said. The government will discuss the 2006 budget draft on Tuesday.