It is better to privatise than to increase taxes

Janusz Lewandowski a member of the European Parliament, vice chairman of the European Parliament budget commission

Publikacja: 11.09.2009 11:58

[b]RZ: Doesn’t the huge budget deficit planned for the next year of nearly PLN 65 billion damage the credibility of Poland in the world? [/b]

Janusz Lewandowski: From the point of view of the government the strategy aimed at increasing of the deficit in order to secure the state expenses is right. But it is impossible to avoid the negative consequences of such a measure that in total will be borne by the minister of finance. Since the beginning of this year the minister has ensured that there will be no increase of the deficit. Such action has been aimed at creation of the image of Poland being a credible and trustworthy country to the investors and a country resistant to the crisis. And this aim has been achieved. We are perceived as the only country with the positive economic growth rate. However, we must remember that many issues were hidden in this year’s budget, as a result of which, the deficit will grow very impressively next year, which does not seem to be credible at all.

[b]Do you believe in the minister’s assurances that the huge deficit will not be a threat to us?[/b]

I must believe that this is true. It is better to choose the lesser of the two evils and focus on acceleration of privatisation rather than try to get higher budgetary revenue by increasing taxes. I think that this way we will be able to survive the bad times until the moment the neighbouring countries start to recover and need our export. Credibility of our bonds is supported by the positive GDP and relatively low deficit in comparison with the other countries in the world.

[b]When will we be able to reduce the deficit below 3% of the GDP?[/b]

This is not a purely economic matter. This problem must be considered rather in the political context and in relation to the election calendar. Many persons in Poland believe in the zero point, i.e. the presidential elections. Then the danger of the president’s veto will disappear and will no longer threat the chance to conduct urgent and necessary reforms.

[b]What reforms?[/b]

First of all, we need to ensure more income by means of changes introduced in the Agricultural Social Insurance Fund, which requires of course the consent of the political ally, i.e. the PSL. Another important issue is completion of the pension reform. Moreover, a complex reform of the public finance must be conducted, and the percentage of the fixed expenses from the state budget must be decreased.

[b]Can we expect adoption of the euro only after that? [/b]

This is a question that will be the subject of the public debate in the media and not only for the next couple of years. Probably, I will be not mistaken if I say that the issue of joining of the monetary union will be the subject of many diploma theses.