Polish Prime Minister Donald Tusk won “breathing space” with a four-year fiscal plan that uses as much as 36 billion zloty ($11.9 billion) of asset sales and cash management savings to defer tax increases and spending cuts.
Polish borrowing costs are at an “accurate” level as the weakness of domestic and external demand will keep inflation below the central bank’s target of 2.5 percent, monetary-policy maker Jan Winiecki said.
Poland’s budget proposal will fail to put the European Union’s biggest eastern member on course to meet the bloc’s deficit deadline as the government avoids spending cuts before next year’s election, analysts said.
Poland’s central bank may keep the benchmark interest rate unchanged today after consumer price growth remained at a three-year low in August and as policy makers await the bank’s updated forecasts next month.
Polish central bank Governor Marek Belka said the government must ignore election-year pressures and focus on controlling the budget deficit, even though its finances are stronger than many European nations.