The Ministry of Finance, Poland has stated that proceeds from dividends of publicly held companies and profits earned by National Bank of Poland will be used to plug holes in the Poland budget 2012.
One such company is PZU, one of the major Polish insurers and operated by the National Treasury.
It has already forecast record profits for the 2011 fiscal and is expected to make substantial dividend payments.
Highlights of Poland Budget 2012:
Jacek Rostowski, the Finance Minister of Poland, has revealed that the national government has come up with three versions of 2012 budget, which are based on the economic future of Eurozone.
One version deals with a reasonable slowdown, another expects a recession and the third version is based on a medium slowdown.
Three different Gross Domestic Product (GDP) growth rate forecasts have been provided 3.2%, 1% and 2.5%. Earlier in September the draft budget for 2012 fiscal had predicted a GDP growth rate of 4%.
Rostowski has stated that in 2012 the government will look to keep budgetary deficit within 3 percent of the Gross Domestic Product. As per the Finance Minister, Poland has committed to the European Union that it will achieve this goal.
If there is a recession, tax rates could be increased in 2012 fiscal.
The budget will be finally approved during December 2012.
It is expected that in 2012 public debt will amount to 51.9 to 53 percent of the GDP, compared to the 2011 figure of 52.7 percent. It was previously estimated that in 2012 the public debt to GDP ratio would be 51.9 percent only.
Allotments for the cohesion policy, which can play an important role in economic growth, have been increased.
Several adjustments have been made with regards to Poland s foreign policy.
In 2012, Poland is expected to make payments amounting to 129 billion Euros and it is committed to spend a total of 147.2 billion in other areas.
Expectations from Poland 2012 Budget:
Economic analysts are of the opinion that in 2012 fiscal the growth rate of Poland economy will vary between 2.5 percent and 4 percent. This means that the budgetary deficit for that year will range from 1.35 billion to 1.6 billion Polish Zloty. The ING Bank has however stated that these projections are fairly optimistic.
Analysts have also said that Poland s economic progress in 2012 will be largely determined by the events in Eurozone but they feel that a recession is unlikely. The European Union and Eurozone though are expected to face some slowdown.
The government will also try hard to keep public debt below 55 percent of the GDP as otherwise they might have to reduce their expenses. The national government was supposed to have introduced a couple of austerity steps in case the public debt had shot over the 55 percent mark but the ING Bank states that they are anyways being implemented.
Dariusz Filar, an economic advisor to Polish Prime Minister Donald Tusk, has said that the budget deficit levels for 2012 may remain the same as 2011. It is expected that in 2011 fiscal budgetary deficit will amount to 5.6 percent of the GDP and the budget deficit for 2012 could be similar.
The International Monetary Fund, Citigroup Inc and BNP Paribas SA have stated that Poland will not be able to achieve an economic growth rate of 4 percent in 2012 fiscal. According to these organizations the main reason behind this is the critical economic condition of its major export partners in Europe.
The IMF is saying that Poland will be able to achieve an economic growth rate of 3 percent; it had previously predicted a growth rate of 3.8 percent.
Jaime Reusche, Assistant Vice President for sovereign debt risk with Moody s Investor Services, New York, has said that Poland needs to be ready to deal with the critical condition of global finances, which could severely dent its overall economy and financial reserves.
Filar has given several suggestions for the continued sustenance of Polish economy in 2012:
Cancellation of every tax incentive
Relaxing business rules and regulations
Increasing contributions made by employers for social welfare funds
Pension benefits for soldiers, miners and policemen need to be abolished
Maximum working age needs to be increased
He has further stated that if these measures are not taken then the government might need to increase the rates of value added taxes (VAT) or impose a sales tax. They might also need to deduct private pension fund transfers.
This has been done previously in 2009 to avert the effects of the then global financial meltdown. Filar has stated, though, that these will only be short term solutions.
Mikolaj Dowgielewicz, who works as the Secretary of the State with the Ministry of Foreign Affairs, Poland, expects the budget to effectively counter the after-effects of the present financial situation across Europe and the world.