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. Last Updated: 07/27/2016

Resignation Delays Polish IMF Deal

WARSAW -- The resignation of Finance Minister Marek Borowski will delay the forging of Poland's new agreement with the International Monetary Fund, a government official has said.


Andrzej Chmiel, Finance Ministry director, said the delay would not be serious and Poland wanted to continue close cooperation with the IMF after the existing standby agreement runs out in March.


"The new deal with have to wait a bit because of these personnel problems but we definitely want to continue cooperation," Chmiel said.


He said Poland met all the criteria agreed on with the IMF for 1993 and that the tight budget plan for this year was also endorsed by an IMF mission currently visiting Warsaw.


But he said the mission was waiting for the final word from the government and parliament on the shape of the budget after coalition deputies unsuccessfully asked the government to increase spending by 20 trillion zlotys ($908.2 million).


"The way the budget is constructed is fine with the fund but we all need to see if the final version is not too much different," Chmiel said.


The deficit is projected to be 83 trillion zlotys, about 4 percent of gross domestic product.


"As there are no additional sources of revenues, the government sees no possibility of financing expenditures required by (parliamentary) commissions," a government statement said. It said the government decided to shift funds within the budget to increase spending on culture, science and education instead of raising the spending total.


But the leftist cabinet, fresh from the power struggle between Borowski and Prime Minister Waldemar Pawlak, is also under pressure from trade unions to increase social spending, thus boosting the deficit.


More than 20,000 Solidarity trade union supporters marched through Warsaw on Wednesday in protest against the budget and calling for more spending on the public sector and unemployment.


IMF support for the budget plan is essential for Poland to obtain the second phase of debt reduction from the Paris Club of government creditors, due in April. The parliament is due to vote on the plan in early March -- in time for IMF approval before the Paris Club deadline.


Chmiel said the talks with the IMF, postponed after Borowski's resignation earlier this month, would start when a new finance minister was found.