November 21, 2011
The re-elected Polish government is determined to tackle far-reaching economic and fiscal reforms in order to prepare the country for future uncertainties and challenges.
It wants to put its public finances in order in view of joining the Euro-zone when the present crisis will have been resolved.. To that end, it aims at reducing its budget deficit to three percent in 2012 and only one per cent in 2015. The public debt is scheduled to fall to 52 percent in 2012 and 47 per cent in 2015. With these very bold goals Poland would easily be able to join other Euro-countries in good fiscal health. It is already in much better shape than any of the four MED member countries, none of which can dream of Polish growth and fiscal performances in the foreseeable future.
Thanks to its fast economic development, GDP growth of close to four per cent in 2011 and projected to exceed two per cent in the coming two years, Poland can afford to tackle reforms more easily than the rest of the EU.
Still, PM Donald Tusk shows a lot of political courage when addressing reforms in sensitive areas like agriculture and pensions:
- In order to reduce the persistent deficit of the old age insurance the new government intends to progressively raise the retirement to 67 years and increase the employers` contribution by two percentage points.
- The new government will also curtail long-standing tax privileges and subsidies for military and police personnel, priests, judges, prosecutors, miners and farmers and lower child allocations for families with annual incomes exceeding € 19.000 .
Other EU governments will be well advised to take a closer look at what Poland strives to achieve despite adverse global conditions.Author : Eberhard Rhein