Polish fiscal plan to buy govt time, delay reforms

The only serious reform in Poland's long-awaited fiscal consolidation plan this month may be a loosening of the country's most significant legal limit on public over-spending.

Faced with plummeting revenue -- even from an economy that eked out some growth last year -- the finance ministry has twice delayed the publishing of plans to reel in a budget deficit that will double this year in nominal terms.

On the surface, officials have cast this as an effort to address some of the remaining baggage from the communist era -- a structure that makes about 70 percent of budget spending set in stone and difficult to manipulate or cut.

But the immediate concern is whether a high deficit -- set to be more than 6 percent of gross domestic product this year -- will drive public debt past thresholds set at 55 and 60 percent of GDP, which under Polish law would trigger draconian cuts in spending and crush domestic demand.

Read more: http://www.forexpros.com/news/central-banks/analysis-polish-fiscal-plan-to-buy-govt-time,-delay-reforms-112558