The cabinet accepted a draft 2006 budget law proposed by finance minister Miroslaw Gronicki, with the deficit at PLN 32.575bn, or the highest level possible without reaction from the European Union. The opposition liberal Civic Platform(PO), the would-be winner of the upcoming elections, has already announced it would lower the deficit to PLN 30bn.
According to the budget draft law discussed by the government yesterday, the revenues are to amount to PLN 189.228bn (5.8% up from 2005) and expenditures would be PLN 221.803bn (5.8% up, or 4.2% up in real terms), the daily newspaper Gazeta Wyborcza reported. At the last moment, the FinMin had to cover the PLN 3.3bn gap resulting from the Sejm's passing the law on return of VAT paid on building materials.
To do that, Gronicki had to raise the deficit level from the earlier planned PLN 31bn to almost PLN 32.6bn, or 3.2% of the expected GDP. Moreover, FinMin has found savings in administration costs of PLN 725mn and plans raising the excise tax on fuels next year.
"If budget revenues are higher than now assumed by FinMin, the increase of excise tax on fuels could be lower," Gronicki said. However, economy minister Jacek Piechota is against the excise tax increases altogether, believing they would be detrimental for the economy. Piechota said the government should seek other solutions to cover the gap. FinMin assumes the economy will grow 4.3% in 2006 (3.3% in 2005), employment will go up 1.2%, and inflation would amount to 1.5%. bb