Friday, August 19, 2011

Fiscal tightening, Polish style

Finance Minister Jacek Rostowski has been on a media blitz of late, trying to calm poor Poles by preaching that Poland's financial standing is a national cause and needs to be defended at all cost, like the country's freedom or Civic Platform's lead in opinion polls. Saying last week "we knew this was coming" was just one of many smart things the minister extraordinaire has said in recent days.

The main point Rostowski and Prime Minister Donald Tusk make is that we are tightening our fiscal policy. After all, this year's budget deficit will be 10 billion zloty lower than the original plan, they say. But they have some trouble pinpointing exactly where they saved money, leading some sceptics to believe the ministry was overly conservative in its original assumptions, by design.

However, we got a hint at what kind the savings are on Tuesday. The government "saved" a further 4 billion zlotys with one swift decision to transfer that amount from a special demographic fund (one to be used to help alleviate problems with balancing the pension system in case the current negative demographic trends continue) to finance current social spending. This is the second time such "savings" were generated. In 2010, it raided the demographic fund for 7.5 billion zlotys.

Of course we are also "saving" on the pension transfer change...doesn't it feel great to be "saving" so much.

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