2008 the deficit is to stand at 3. 7 % of gdp. such a slow pace of deficit reduction has been criticized by the council of the european union 16, which pointed out that poland would be failing to comply with the required annual fiscal adjustment of 0. 5 percentage points of gdp in cyclically adjusted terms. nbp projections confirm that the deficit path is not an ambitious one. in case of a favorable macroeconomic scenario, particularly one in which the job - rich growth observed in 2004 and 2005 continues over the period 2006 - 2008, the deficit could decline more than set forth in the convergence programme, even in the absence of consolidation measures but also without the introduction of new, deficit - increasing legislation. a stronger deficit reduction could be additionally supported by the implementation of the new public finance act, which should contribute to more efficient fiscal management. unfortunately, these upside risks to deficit targets in the convergence programme are far outweighed by downside risks in the form of new deficit - increasing legislation. this includes the recently proposed 4. 5 point cut in social contribution rates. while this measure would bring about the much needed reduction of the tax wedge on labour income, it would cost the budget more than 1 % of gdp in foregone revenue. therefore it is essential that it should be accompanied by cuts in spending. instead, it is more likely that spending will increase, with, among other measures, salary hikes promised to various groups of public employees, as well as more generous social assistance and pension indexation formulas. to sum up, in the medium - term horizon, poland should be in a position to achieve a general government balance in line with the maastricht fiscal criteria. this would require moderate discipline in public spending, which unfortunately does not appear very likely at the present moment. conclusions global growth has been very strong in the last few years and global financial conditions have been very favorable for emerging markets. this prosperous period has been used in some countries to improve public finances, while certain countries have not made much of a progress. if some of the risks mentioned today materialize, global growth and global risk appetite may decline and many emerging markets will find it harder to maintain a high growth rate. it is therefore of utmost importance convergence programme. 2005 update, january 2006. council opinion of 14 march 2006 on the updated convergence programme of poland, 2005 - 2008 ( 2006 / c 82 / 12 ). that necessary reforms are introduced as early as possible to get ready for a possible global head

euro area countries, germany seems to be against withdrawing the €500 note as the germans are used to paying cash. is that a problem? some people, especially in germany, are anxious about the disappearance of cash payments, which for them represent an element of personal freedom. it ’ s a legitimate argument and i want to reassure them that it ’ s not about getting rid of banknotes in general ; the discussion is only about the €500 note. where are the €500 notes? in which countries? there ’ s a lot of talk about russia … we reckon that at least 20 % of the notes in circulation, by value, are held outside the euro area, the majority in denominations from €50 to €500. most of these notes can be found in the euro area ’ s neighbouring countries, especially in eastern europe and russia. technically, there could be a monetary policy advantage for the ecb if it decided to withdraw the €500 note. those who have it could in fact exchange it for banknotes in another currency, which would automatically push down the value of the single currency. could that be a factor in its withdrawal? no, this discussion has nothing to do with monetary policy. bis central bankers ’ speeches