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 (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> 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> 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, 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, 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> CALGARY, Alberta, Aug 27 (Reuters) - Canada's main oil-producing province Alberta said on Tuesday the budget deficit for the three months from April 1 to June 30, 2019, was C$835 million ($629 million), compared with a deficit of C$1.2 billion for the same period a year earlier, because of lower expenses.

It was the first fiscal update released by the new United Conservative Party government, which was elected in April, and did not include an update on the full-year budget deficit.

Alberta's 2018-19 budget deficit for the financial year ending March 31 was C$6.7 billion, according to government figures released in June. </s> WASHINGTON (AP) — President Donald Trump unveiled a $4.4 trillion budget plan Monday that envisions steep cuts to America's social safety net but mounting spending on the military, formally retreating from last year's promises to balance the federal budget.

The president's spending outline for the first time acknowledges that the Republican tax overhaul passed last year would add billions to the deficit and not "pay for itself" as Trump and his Republican allies asserted. If enacted as proposed, though no presidential budget ever is, the plan would establish an era of $1 trillion-plus yearly deficits.

The open embrace of red ink is a remarkable public reversal for Trump and his party, which spent years objecting to President Barack Obama's increased spending during the depths of the Great Recession. Rhetoric aside, however, Trump's pattern is in line with past Republican presidents who have overseen spikes in deficits as they simultaneously increased military spending and cut taxes.

"We're going to have the strongest military we've ever had, by far," Trump said in an Oval Office appearance Monday. "In this budget we took care of the military like it's never been taken care of before."

Trump's budget revived his calls for big cuts to domestic programs that benefit the poor and middle class, such as food stamps, housing subsidies and student loans. Retirement benefits would remain mostly untouched by Trump's plan, as he has pledged, though Medicare providers would absorb about $500 billion in cuts — a nearly 6 percent reduction. Some beneficiaries in Social Security's disability program would have to re-enter the workforce under proposed changes to eligibility rules.

While all presidents' budgets are essentially dead on arrival — Congress writes and enacts its own spending legislation — Trump's plan was dead before it landed. It came just three days after the president signed a bipartisan agreement that set broad parameters for spending over the next two years. That deal, which includes large increases for domestic programs, rendered Monday's Trump plan for 10-year, $1.7 trillion cuts to domestic agencies such as the departments of Health and Human Services, Agriculture and Housing and Urban Development even more unrealistic.

The White House used Monday's event to promote its long-awaited plan to increase funding for infrastructure. The plan would put up $200 billion in federal money over the next 10 years in hopes of leveraging a total of $1.5 trillion in infrastructure spending, relying on state and local governments and the private sector to contribute the bulk of the funding.

But after his aides talked up that plan over the weekend, Trump suggested that his infrastructure proposal wasn't a big deal for him.

"If for any reason, they don't want to support to it, hey, that's going to be up to them," he said of the Republican-controlled Congress. "What was very important to me was the military; what was very important to me was the tax cuts."

Trump also is proposing work requirements for several federal programs, including housing subsidies, food stamps and Medicaid. Such ideas have backing from powerful figures in Congress including Republican House Speaker Paul Ryan of Wisconsin, who promises action on a "workforce development" agenda this year.

There was immediate opposition from Democrats.

"The Trump budget proposal makes clear his desire to enact massive cuts to health care, anti-poverty programs and investments in economic growth to blunt the deficit-exploding impact of his tax cuts for millionaires and corporations," said Rep. John Yarmuth of Kentucky, the top Democrat on the House Budget Committee.

Some Republicans, on the other hand, said spending was much too high.

"This budget continues too much of Washington's wasteful spending — it does not balance in ten years, and it creates a deficit of over a trillion dollars next year," said Rep. Matt Gaetz of Florida. "We cannot steal from America's future to pay for spending today

Trump's plan aims at other familiar targets. It would eliminate the Corporation for Public Broadcasting, the National Endowment for the Arts and National Endowment for the Humanities, and the Institute of Museum and Library Services. The administration wants NASA out of the International Space Station by 2025 and private businesses running the place instead.

But the domestic cuts would be far from enough to make up for the plummeting tax revenue projected in the budget.

Trump's plan sees a 2019 deficit of $984 billion, though White House Budget Director Mick Mulvaney admits $1.2 trillion is more plausible after last week's congressional budget pact and $90 billion worth of disaster aid is tacked on. That would be more than double the 2019 deficit the administration promised last year.

All told, the new budget sees accumulating deficits of $7.2 trillion over the coming decade; Trump's plan last year projected a 10-year shortfall of $3.2 trillion. And that's assuming Trump's rosy economic predictions come true and Congress follows through — in an election year — with politically toxic cuts to social programs, farm subsidies and Medicare providers.

Last year Trump's budget promised such ideas could generate a small budget surplus by 2027; now, his best-case scenario is for a $450 billion deficit that year, more than $300 billion of which can be traced to his December tax cut.

In stark numbers, the budget rewrites the administration's talking points for last year's tax plan, which administration figures such as Treasury Secretary Steven Mnuchin promised would more than pay for itself.

"Not only will this tax plan pay for itself, but it will pay down debt," Mnuchin declared in September.

Instead, Trump's budget projects that tax revenues will plummet by $3.7 trillion over the 2018-27 decade relative to last year's "baseline" estimates.

The budget also includes $1.6 billion for the second stage of Trump's proposed border wall, a 65-mile segment in Texas' Rio Grande Valley. Trump's request last year for 74 miles of wall in San Diego and the Rio Grande Valley is pending before lawmakers right now.

Once again, there's no mention of how Mexico would have to pay for it, as Trump repeatedly promised during the presidential campaign and after his victory.

The plan reprises proposals to curb crop insurance costs, cut student loan subsidies and reduce pension benefits for federal workers. They went nowhere last year.

Trump's plan promises 3 percent growth for the nation's economy, continuing low inflation and low interest yields on U.S. Treasury bills despite a flood of new borrowing. That likely underestimates the mounting cost of financing the government's $20 trillion-plus debt, many economists say.

Mark Zandi, chief economist at Moody's Analytics, said a surge in stimulus from higher government spending and tax cuts would boost growth but for only for a short time.

"This will meaningfully raise the odds that after juiced-up growth in 2018 and 2019, we will get a much weaker economy, possibly a recession in the next decade," Zandi said. "In good times, budget policy should be working to get the deficits down because bad times are sure to come."

Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. </s> WASHINGTON -- A new government analysis of U.S. President Donald Trump's budget plan says it wouldn't come close to balancing the federal ledger like the White House has promised.

Thursday's Congressional Budget Office report says that Trump's budget, if followed to the letter, would result in a US$720-billion deficit at the end of 10 years instead of the slight surplus promised.

CBO said Trump's budget would reduce the deficit by a total of US$3.3 trillion over 10 years instead of the US$5.6-trillion deficit cut promised by the White House. The nonpartisan scorekeeper estimated that deficits in each of the coming 10 years will exceed the US$585 billion in red ink posted last year.

CBO says that Trump relied on far too optimistic predictions of economic growth and that Trump's rosy projections are the chief reason his budget doesn't balance as promised.

"Nearly all of that [deficit] difference arises because the administration projects higher revenue projections — stemming mainly from a projection of faster economic growth," CBO said.

Trump's budget predicts that the U.S. economy will soon ramp up to annual growth in gross domestic product of three per cent; CBO's long-term projections predict annual GDP growth averaging 1.9 per cent.

"The CBO report shows that the president built his budget on fantasy projections," said Rep. John Yarmuth of Kentucky, the top Democrat on the House Budget Committee.

Trump's May budget submission proposed jarring, politically unrealistic cuts to the social safety net for the poor and a swath of other domestic programs. Many of its recommendations were deemed dead on arrival and are being ignored by Republicans controlling Congress.

CBO also said that the Trump budget contained too little detail to accurately predict its effects on the economy. The White House promised that its juiced-up economic projections will produce US$2.1 trillion in deficit reduction, mostly from overhauling the tax code and reducing the burden regulations have on the economy. But Trump's tax overhaul plan is so far so sketchy that it can fit on a single page.

The analysis came as the administration and Republicans controlling the House are struggling to unite Republicans behind an alternative congressional budget plan that's a prerequisite for a hoped-for tax reform effort this fall.

The stakes on completing a budget are high for the Trump administration. Budget Director Mick Mulvaney said Thursday that the administration's plans to cut taxes hinges on completing a 2018 budget, a procedural requirement so that the tax cuts can be passed without having to rely on Democratic support in the Senate.

"The tax reform concepts rely almost entirely on the budget resolution passing," Mulvaney said at a breakfast with reporters.

Mulvaney said that discussion continues among House lawmakers about fashioning a package of cuts from so-called mandatory programs that can win support from both conservative and centrist Republicans.

But Mulvaney was quick to downplay calls for an aggressive timeline on the administration's agenda. He said it was unreasonable to expect Congress to raise the government's borrowing authority, replace the 2010 health insurance law and pass a 2018 budget in the "next couple of weeks." Mulvaney said that the priority is completing the GOP's rewrite of health care first.

CBO is the nonpartisan scorekeeper charged with giving lawmakers independent analysis of legislation, the budget and the economy. While the White House and many Republicans have criticized CBO's coverage estimates for the Obamacare health law and the House and Senate GOP replacement plans, the White House hasn't been critical of CBO's budget predictions.

"While it does very well at times predicting things on budget — whether it's revenue or spending, we don't always agree that it does a great job predicting [health-care] coverage," White House deputy press secretary Sarah Huckabee Sanders told reporters last month.

On Thursday, the White House budget office took heart that CBO credited it with US$4.2 trillion worth of spending cuts over the upcoming decade, including US$1.9 trillion from health-care programs; it also says the administration would cut taxes by almost US$1 trillion over that time, mostly because of its plans to repeal the Affordable Care Act.

The deficit cuts may come up short of balance, but the White House noted they are still very ambitious.

"We are thrilled that CBO confirms that the president's proposed budget resulted in the largest deficit reduction they have ever scored. CBO agrees that this is the largest deficit reduction package in American history," said White House budget office spokeswoman Meghan Burris, promising that Trump's economic agenda "will jumpstart the economy."
Poland anounces a planned national budget with zero deficit for the first time in 30 years.