Poland plans no budget deficit for first time in 30 years

WARSAW, Poland (AP) — Poland's prime minister says the 2020 state budget will for the first time in 30 years not run a deficit, chiefly thanks to efficient tax collection and changes to the pension system.

Premier Mateusz Morawiecki spoke Tuesday following a weekly government session that approved a draft budget where spending and income are balanced at 429.5 billion zlotys ($109 billion).

Morawiecki stressed it is Poland's first budget without a deficit since it became a democracy. It still needs consultations with worker and employer groups and approval from two parliament chambers and the president.

The announcement comes before Oct. 13 parliamentary elections, in which the ruling party is expected to win a majority, chiefly thanks to its program of generous subsidies to families.

Observers noted a budget can be amended during the fiscal year. </s> WARSAW, Poland (AP) - Poland's prime minister says the 2020 state budget will for the first time in 30 years not run a deficit, chiefly thanks to efficient tax collection and changes to the pension system.

Premier Mateusz Morawiecki spoke Tuesday following a weekly government session that approved a draft budget where spending and income are balanced at 429.5 billion zlotys ($109 billion).

Morawiecki stressed it is Poland's first budget without a deficit since it became a democracy. It still needs consultations with worker and employer groups and approval from two parliament chambers and the president.

The announcement comes before Oct. 13 parliamentary elections, in which the ruling party is expected to win a majority, chiefly thanks to its program of generous subsidies to families.

Observers noted a budget can be amended during the fiscal year.

In this Aug. 15, 2019 photo, Poland's Prime Minister Mateusz Morawiecki is speaking during national observances of the Armed Forces Day in Katowice, Poland. On Tuesday Morawiecki demanded explanations from the justice minister after allegations surfaced the minister's deputy encouraged an online hate campaign against judges critical of the government. (AP Photo/Czarek Sokolowski) </s> WARSAW, Poland (AP) — Poland’s next annual state budget will for the first time in 30 years not run a deficit, mainly thanks to efficient tax collection and changes to the pension system, the prime minister said Tuesday.

Mateusz Morawiecki spoke following a weekly government session that approved a draft 2020 budget where spending and income are balanced at 429.5 billion zlotys ($109 billion).

Morawiecki noted that it is Poland’s first budget without a deficit since it became a democracy. It still needs consultations with worker and employer groups and approval from two parliament chambers and the president.

“We are very responsible in managing the public finances,” Morawiecki said, promising that the budget will “no longer be an ATM for tax-evading criminals.”

The announcement comes before Oct. 13 parliamentary elections, in which the ruling party is expected to win a majority, chiefly thanks to its program of generous subsidies to families with children and to the elderly.

Morawiecki vowed all these programs will be continued.

The government’s high spending has caused concern among some economists and ordinary Poles about the condition of state finances, especially after inflation started to rise this year.

Morawiecki noted that the state finances were helped by an increase in state income, such as value-added sales tax and corporate income tax, and better collection of personal income tax. Significant funds are also expected from a tax on pension funds, from the sale of 5G wireless licenses and green gas certificates, and by reducing state administration jobs.

The economy is forecast to grow 3.7% next year, with inflation seen at 2.5 %.

Observers noted that a budget can be amended during the fiscal year, to allow for a deficit.

Copyright © 2019 The Associated Press. All rights reserved. This website is not intended for users located within the European Economic Area. </s> WARSAW (Reuters) - Poland’s government approved a plan on Tuesday to eliminate its budget deficit for the first time since 1990, Prime Minister Mateusz Morawiecki said, a move that could help bolster public support for its ambitious social spending plans ahead of a national election on October 13.

Robust economic growth and improved tax collection has kept Poland’s deficits low in recent years, despite substantial welfare spending. Last year’s deficit totaled 10.4 billion zlotys ($2.65 billion) and is to be cut to zero in 2020.

“We present a balanced budget for the first time in 30 years,” Morawiecki told a news conference devoted to the 2020 budget draft approved by his cabinet.

It has yet to be approved by parliament, which will be reconstituted after the elections.

Both budget revenues and spending are envisaged at 429.5 billion zloty ($109.40 billion), Morawiecki said.

In the last election, the opposition criticized the PiS’ social spending programs, saying the country could not afford them. The balanced budget could help to show voters they are fiscally responsible and firm up support for their ambitious social plans.

Critics say however that the budget’s assumptions are based on one-offs and are too optimistic in light of an expected economic slowdown.

“In large extent this is thanks to big one-off payments, such as pension reform fees, CO2 emission certificates, the sale of 5G frequencies - these elements add up to two thirds of the 2019 planned deficit,” chief economist at ING Bank Slaski Rafal Benecki said.

The budget situation might turn out to be less rosy, especially once economic growth slows down to 3.7% next year from 4.4%, according to a Reuters poll published by Refinitiv.

Earlier, the newspaper Rzeczpospolita reported that the 2020 budget would benefit from the sale of mobile phone frequencies, rights to carbon dioxide emissions and cash connected with a pension reform. Taken together, those steps should bring in 17.8 billion zloty.

Another 14.9 billion zloty will come from improvements in tax collection and 5.2 billion zloty will come from changes to social security system payments.

Higher alcohol taxes are expected to bring in 1.1 billion zloty, a new tax for millionaires another 1.1 billion zloty and changes to the ecological tax an additional 1.4 billion.

“If you take out 20 billion zloty from Poles’ pockets, and cut spending on health sector at the cost of people suffering from cancer and heart diseases, then you can get a balanced budget easily,” said Izabela Leszczyna, a member of parliament for the opposition centrist party Civic Platform (PO.

Despite scandals that have plagued the PiS in recent weeks, it still leads in opinion polls. Whether it could form a government - alone or in a coalition - would depend on the mix of parties that win seats in the election.

The newest poll conducted by Indicator pollster for state TV said on Tuesday that PiS could earn 41% of votes, PO 29%, leftist Lewica 11%, and coalition of agrarian party PSL and anti-system Kukiz’15 6%.

In a reaction to the news on the balanced budget, bond yields fell by seven basis points in the afternoon - mBank dealer, Mateusz Milewski explained that investors expected the government to issue less debt.

Poland’s zloty currency did not react to the news. It is slightly positive, but the market is more focused on the global environment, Warsaw-based dealers said. At 15:08 Warsaw time euro was quoted at 4.366 zloty, up 0.1% on a day.

(This story corrects to clarify timing of budget date in lead). </s> In this Aug. 15, 2019 photo, Poland's Prime Minister Mateusz Morawiecki is speaking during national observances of the Armed Forces Day in Katowice, Poland. On Tuesday Morawiecki demanded explanations from the justice minister after allegations surfaced the minister's deputy encouraged an online hate campaign against judges critical of the government. (AP Photo/Czarek Sokolowski)

WARSAW, Poland (AP) — Poland's next annual state budget will for the first time in 30 years not run a deficit, mainly thanks to efficient tax collection and changes to the pension system, the prime minister said Tuesday.

Mateusz Morawiecki spoke following a weekly government session that approved a draft 2020 budget where spending and income are balanced at 429.5 billion zlotys ($109 billion).

Morawiecki noted that it is Poland's first budget without a deficit since it became a democracy. It still needs consultations with worker and employer groups and approval from two parliament chambers and the president.

"We are very responsible in managing the public finances," Morawiecki said, promising that the budget will "no longer be an ATM for tax-evading criminals."

The announcement comes before Oct. 13 parliamentary elections, in which the ruling party is expected to win a majority, chiefly thanks to its program of generous subsidies to families with children and to the elderly.

Morawiecki vowed all these programs will be continued.

The government's high spending has caused concern among some economists and ordinary Poles about the condition of state finances, especially after inflation started to rise this year.

Morawiecki noted that the state finances were helped by an increase in state income, such as value-added sales tax and corporate income tax, and better collection of personal income tax. Significant funds are also expected from a tax on pension funds, from the sale of 5G wireless licenses and green gas certificates, and by reducing state administration jobs.

The economy is forecast to grow 3.7% next year, with inflation seen at 2.5 %.

Observers noted that a budget can be amended during the fiscal year, to allow for a deficit. </s> WARSAW, Aug 26 (Reuters) - Poland's government plans to move its budget out of deficit in 2020 for the first time in 30 years, Rzeczpospolita daily said on Monday quoting sources close to the government.

Last year's deficit totaled 10.8 billion zloty ($2.75 billion) despite hefty welfare handouts offered by the ruling nationalist Law and Justice (PiS) party.

When contacted by Reuters, the government spokesman declined to comment saying the decision over the 2020 budget is to be taken only on Tuesday.

Rzeczpospolita said the 2020 budget would receive injections from the sale of mobile phone frequencies, rights to CO2 emissions and cash connected with the country's pension system reform. Taken together, the steps will bring in 17.8 billion zloty.

Another 14.9 billion zloty will come from further improvements in tax collection, and 5.2 billion zloty from changes to social security system payments.

Higher alcohol taxes are to bring in 1.1 billion zloty, new tax for millionaires another 1.1 billion zloty while changes to the ecological tax 1.4 billion, Rzeczpospolita said.

The government expects economic growth in the biggest post-communist European Union member country to slow to 3.7% next year from 5.1% this year.

Rzeczpospolita said that a balanced budget will be a positive factor for the ruling party in the ongoing election campaign. Poles are to vote for their representatives to the lower and upper houses of parliament in October.

Last week, opinion polls showed a decline in support for the PiS after a series of scandals. A PiS parliament speaker resigned after being criticised for using a government jet for private flights with his family and a deputy justice minister resigned last week after a website reported that he sought to discredit judges critical of the government's judicial reforms by planting media rumours about their private lives.

The Polish zloty was almost unchanged at 4.3825 versus the euro in early trade, according to Refinitiv data. </s> BRUSSELS — The latest on Wednesday’s European Union budget proposals (all times local):

Austrian Chancellor Sebastian Kurz says while there are positive elements to the proposed European Union budget, it’s not acceptable in its current form.

Kurz told reporters Wednesday that “for us an acceptable solution is still a long way away” and that he was counting on “hard and long negotiations.”

He says he found the considerations for the EU’s external borders positive, but that the current proposal places too heavy a burden on the net contributors to the budget.

He says the Brexit situation should be taken as an opportunity to become more economical and more efficient.

His Austrian People’s Party faction in European Parliament struck a more positive note, saying the proposal was “a step in the right direction and a suitable basis for tough negotiations.”

Dutch Prime Minister Mark Rutte says the European Commission’s proposed new seven-year budget is unacceptable because it will mean the Netherlands’ EU bill will increase too much.

In a statement Wednesday, Rutte said that the smaller EU that will come after the exit of Britain “must also mean a smaller budget.” He says that means making tough choices.

The Netherlands is one of the wealthier governments that contributes more to the European Union than it gets back. Rutte has been pushing for budgetary restraint in the aftermath of Brexit.

Rutte says the Netherlands will negotiate hard “for a modern budget in which the burdens are shared fairly.”

Polish officials have reacted with relief to the proposed long-term European Union’s spending plan, saying the cuts and shifts in spending are much less painful than had been expected.

Deputy Foreign Minister Konrad Szymanski said Poland “appreciates” that the proposals from the European Commission are largely safeguarding spending in Central and Eastern Europe.

However, Szymanski conceded that compromises are still needed during the long budget process ahead.

Another member of Poland’s ruling right-wing party, Zdzislaw Krasnodebski who is European Parliament’s deputy speaker, said the cuts in future funding are “minimal.”

Krasnodebski said “none of the black scenarios” are on the horizon.

Warsaw is involved in a dispute with EU leaders over its rule of law record that had raised concerns that it would face significant punitive cuts in spending.

The German government said the European Commission’s budget proposal provided a good basis for the beginning of negotiations on the future of the EU’s finances.

In a joint statement, German Foreign Minister Heiko Maas and Finance Minister Olaf Scholz noted that the proposal would “considerably increase” the financial burden on Germany.

They said that under the proposals, Germany would need to pay an average of up to 10 billion euros ($12 billion) more a year from 2021.

“We are willing to fulfil our responsibilities for strengthening the European Union but this also requires a fair burden-sharing of all member states,” the pair said.

In the upcoming discussions which are likely to take months, they added that Germany will push to “sustainably strengthen the European Union’s capability for action over the next seven years” and enforce a “fundamental modernization” of EU spending.

Among other priorities, Germany is looking for better protection for the EU’s external borders and increased co-operation in joint defence policy.

The European Union’s executive branch has proposed a budget to finance new priorities like defence and border control as well as compensating for Britain’s departure from the bloc.

European Commission President Jean-Claude Juncker said Wednesday that the 2021-2027 budget will be “bigger than the preceding one, because it will determine the future of our Europe of 27” members.

The Commission unveiled a seven-year spending package worth 1.135 trillion euros ($1.36 trillion), which accounts for around 1.1 per cent of the bloc’s total output.

Agricultural funding and “cohesion funds” that help raise the infrastructure standards of poorer states are both to be cut by around 5 per cent.

The Commission is also seeking powers to suspend or restrict funding to countries whose rule of law standards might pose financial risks. </s> Polish opposition leaders called on Saturday for days of anti-government protests and vowed to maintain a blockade of parliament’s main hall that the ruling party condemned as an illegal attempt to seize power.

About two dozen members of the opposition Civic Platform (PO) took turns to sit in the legislature’s plenary hall through the night and the party’s leader said they would remain there for the next few days.

“We will be on the streets until they are done destroying the country,” Mateusz Kijowski, the leader of the Committee for the Defence of Democracy movement, told protesters.

Several thousand people protested in Warsaw and other cities after police broke up a blockade of the entrances of the parliament building in Warsaw in the early hours.

Poland’s biggest political standoff in years began on Friday when opposition lawmakers objecting to plans by the ruling Law and Justice (PiS) party to curb media access to parliament blocked the plenary hall podium ahead of a budget vote.

PiS lawmakers later moved voting to another area without media access, prompting accusations they had passed the 2017 budget illegally, breaching the constitution.

The clash with the opposition has highlighted a growing divide in eastern Europe’s largest economy, with some Poles increasingly angry over the PiS government’s efforts to assert more control over state institutions.

“If it becomes clear that it is impossible to talk to (PiS lawmakers), we should have early elections,” Ryszard Petru, head of the liberal Nowoczesna grouping, told protesters at parliament.

A snap election is unlikely, however, as PiS holds an outright majority in parliament and would be able to overrule any vote of no confidence.

Poland’s Western allies have also expressed concerns over a push by the government to reform the constitutional court, saying it contravened democratic standards.

But despite criticism at home and abroad, the euroskeptic PiS enjoys steady support among many Poles eager to hear its message of higher welfare, more Catholic values in public life and less dependence on foreign capital.

European Union Council President Donald Tusk, former head of the PO – Poland’s largest opposition party – urged authorities to respect the constitution and warned about the risks of disregarding “the European model of democracy.”

“I appeal to those who have real power to respect and regard the people, constitutional principles and morals,” Tusk, who has a long-standing feud with PiS head Jaroslaw Kaczynski, told a cultural conference in Poland’s western city of Wroclaw.

“Those who undermine the European model of democracy, attack the constitution and good customs, expose all of us to strategic risks. By throwing away the spirit of freedom and community, they write the next act of Poland’s solitude,” he added.

Government officials deny behaving undemocratically and have accused opposition leaders of fomenting dissent.

Interior Minister Mariusz Blaszczak said the opposition blockade of parliament was an “illegal attempt to seize power,” while Prime Minister Beata Szydlo accused opposition lawmakers of being focused on “brawls”.

Later in the day, however, Kaczynski told the speaker of the upper house of parliament to organize a meeting with media outlets on Sunday to discuss the new plan for journalists’ access, PAP news agency reported, citing government sources.

Meanwhile, Polish President Andrzej Duda, a PiS ally, called on all sides to calm down. “I am ready to mediate in this matter,” he said in a statement.

A Reuters correspondent in Warsaw and other journalists were not allowed to enter parliament on Saturday, which PO leader Grzegorz Schetyna called unacceptable.

“Parliament cannot be governed by censorship,” he told a news conference. “It cannot be without journalists.” </s> The latest on Wednesday European Union budget proposals (all times local):

Dutch Prime Minister Mark Rutte says the European Commission's proposed new seven-year budget is unacceptable because it will mean the Netherlands' EU bill will increase too much.

In a statement Wednesday, Rutte said that the smaller EU that will come after the exit of Britain "must also mean a smaller budget." He says that means making tough choices.

The Netherlands is one of the wealthier governments that contributes more to the European Union than it gets back. Rutte has been pushing for budgetary restraint in the aftermath of Brexit.

Rutte says the Netherlands will negotiate hard "for a modern budget in which the burdens are shared fairly."

Polish officials have reacted with relief to the proposed long-term European Union's spending plan, saying the cuts and shifts in spending are much less painful than had been expected.

Deputy Foreign Minister Konrad Szymanski said Poland "appreciates" that the proposals from the European Commission are largely safeguarding spending in Central and Eastern Europe.

However, Szymanski conceded that compromises are still needed during the long budget process ahead.

Another member of Poland's ruling right-wing party, Zdzislaw Krasnodebski who is European Parliament's deputy speaker, said the cuts in future funding are "minimal."

Krasnodebski said "none of the black scenarios" are on the horizon.

Warsaw is involved in a dispute with EU leaders over its rule of law record that had raised concerns that it would face significant punitive cuts in spending.

The German government said the European Commission's budget proposal provided a good basis for the beginning of negotiations on the future of the EU's finances.

In a joint statement, German Foreign Minister Heiko Maas and Finance Minister Olaf Scholz noted that the proposal would "considerably increase" the financial burden on Germany.

They said that under the proposals, Germany would need to pay an average of up to 10 billion euros ($12 billion) more a year from 2021.

"We are willing to fulfill our responsibilities for strengthening the European Union but this also requires a fair burden-sharing of all member states," the pair said.

In the upcoming discussions which are likely to take months, they added that Germany will push to "sustainably strengthen the European Union's capability for action over the next seven years" and enforce a "fundamental modernization" of EU spending.

Among other priorities, Germany is looking for better protection for the EU's external borders and increased cooperation in joint defense policy.

The European Union's executive branch has proposed a budget to finance new priorities like defense and border control as well as compensating for Britain's departure from the bloc.

European Commission President Jean-Claude Juncker said Wednesday that the 2021-2027 budget will be "bigger than the preceding one, because it will determine the future of our Europe of 27" members.

The Commission unveiled a seven-year spending package worth 1.135 trillion euros ($1.36 trillion), which accounts for around 1.1 percent of the bloc's total output.

Agricultural funding and "cohesion funds" that help raise the infrastructure standards of poorer states are both to be cut by around 5 percent.

The Commission is also seeking powers to suspend or restrict funding to countries whose rule of law standards might pose financial risks.
Poland anounces a planned national budget with zero deficit for the first time in 30 years.