|
|
|
|
||
|
||
|
|
||
| SEARCH | SUBSCRIBE | ||
|
A major element of Poland's fiscal reform attempts cleared Parliament Friday, keeping the candle lit for Poland's euro-adoption hopes, themselves tied closely to Poland's ability to curb its runaway budgetary deficits. Parliament passed a series of bills to eliminate the yearly adjustment of pension and disability benefits and limit such adjustments, or indexations, to one every three years, or whenever cumulative inflation reaches 5%, whichever comes first. The bills also create the means to pay pensioners extra money over the next six years, making up for the low pensions disbursed to those who retired between 1993 and 1998. The new indexation system will allow the state budget to save PLN 8.9 bln between 2005 and 2007, part of the total PLN 16.6 bln savings from 2005 to 2010, in another step towards curbing public debt and keeping it from exceeding 60% of Poland's GDP. As set out by the country's constitution, surpassing the 60% level would lead to severe spending cuts. "The years of 2005-2007 have key meaning for recovery of public finances. Parliament approved a solution which will allow us to increase savings by PLN 4 bln, instead of the solution offered by the parliamentary committee," Social Policy Minister Krzysztof Pater told a news conference. "This is an amount that strongly increases probability of not exceeding 60% of GDP in public debt." A parliamentary committee had unexpectedly recommended Thursday that the trigger for benefit indexation be set at 3% cumulative inflation and that the underfunding of the 1990s be paid back in a lump sum. Such steps would have greatly undermined the savings effects of the bills. Savings on the new pension reforms system will total PLN 11.9 bln in 2005-2007, from which, however, the government will have to earmark PLN 3 bln to compensate for the underfunding of the 1990s. Between 2005-2010, the pension reforms will bring a total of PLN 28.1 bln into state coffers, though of that, PLN 11.5 bln will be paid right back out to offset the pension shortfall of the mid-1990s. "This vote means that we continue to work on recovery of public finances," a satisfied Minister of Economy and Labor Jerzy Hausner told reporters after the vote. The vote might also represent the continuation of Hausner himself in the government. Rumors have surfaced repeatedly that Hausner ties his job to the fate of the fiscal austerity program he designed, although the Minister has denied any direct correlation. Talk of Hausner's imminent resignation increased with a Thursday announcement that Minister of Finance Andrzej Raczko will soon step down from his post. The bills passed Friday were the first major step to enact the social spending side of the so-called Hausner Plan, an omnibus set of bills originally designed to cut some PLN 50 bln in social and administrative costs in 2004-2007, but well weakened as Poland's government has suffered crises of support. Few of the proposed administrative cuts have been made to date. The battle on social spending mostly lies ahead. Additional bills to rein in social spending will come to parliamentary vote in the coming week. "It can't be that public finances can be rescued by only two groups of people - the government and pensioners," Pater told reporters in Parliament after the final debate and vote. "Other groups will be involved in public finance restoration." The coming week's votes will bring the high-income self-employed into the game, followed by a comparatively wealthy class of farmers. A bill to reform the farmer social security system, where premiums only cover 10% of benefits while the budget subsidizes the rest, is to be sent to Parliament for approval in September. The bill stipulates that higher-income farmers would carry a greater portion of the social security burden for the sector. "We would like this bill to pass through social consultations at the end of July or at the beginning of August which means that government could approve it in September and sent to the Parliament," Pater said. In attempts to continue recovery of public finances, Parliament will vote on another three bills concerning the social insurance system but the savings are expected to be lower than on the indexation bill. "This will certainly not be an amount similar to the one we gained from changes in the indexation system but the group of people affected by these bills will be also much less," Pater explained.
|
