Poland approved the outline of its 2014 budget, which assumes the European Union’s largest eastern economy will expand 2.5 percent.
The Cabinet agreed to allow a wider fiscal deficit of as much as 55 billion zloty ($17.1 billion), compared with 35.6 billion zloty this year, according a statement e-mailed today. Inflation will average 2.4 percent in 2014, while unemployment will be 13.8 percent.
“Our forecasts are rather restrained and cautious,” Prime Minister Donald Tusk told a news conference after the government met in Warsaw. “Economic growth of about 2.5 percent seems probable.”
Poland’s economy is poised to expand 1.5 percent this year, its slowest pace since 2002, as the 17-nation euro area remains stuck in a record-long recession, the Finance Ministry predicts. The central bank has cut interest rates by 2 percentage points since November to support flagging growth, with policy makers reducing the benchmark to a record-low 2.75 percent on June 5.
The government is considering revising this year’s budget to “to find ways to make 2013 less painful” for the public, possibly through cuts in defense spending, according to Tusk. The revision may come “this summer,” he said.
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