Poland Adverts Risk of Breaching Cautionary Threshold of 55pct of GDP

Poland will definitely avoid its public debt exceeding 55 percent of GDP thanks to the proposed changes to the pension system, redirecting a major part of pension premiums from private pension funds (OFE) to the pay-as-you-go system, Finance Minister Jacek Rostowski told reporters. Next year public debt will stabilize at the current level and in the following years it will start to fall, according to the Finance Minister. "In percentage points within the whole year, the changes in OFE will reduce the public finance sector deficit and public debt by just over 1 ppt of GDP, which translates to some 15 billion zlotys," Rostowski said. "In the following years it will be around 1 ppt." Lowering deficit and debt will have a positive effect on the zloty and may lead to its appreciation, Rostowski claimed. The minister underlined that the reform will not have a negative effect on the domestic debt market. The government also plans to allow OFE a greater freedom to invest in equities, he added. The ministry forecasts debt-to-GDP level in 2010 at 53-53.5 percent. Source: The Warsaw Voice