October 22, 2019 / 10:39 AM / a month ago

Poland says it may withdraw social security reform, impacting budget

WARSAW (Reuters) - Poland could withdraw a measure to increase social security payments for high earners, a government spokesman said on Tuesday, raising the possibility that the country will not have a balanced budget in 2020 as planned.

Poland announced plans this year for its first balanced budget in three decades, with one contributory factor being a plan to remove a limit on social security contributions of 30 times the amount paid by someone on an average salary.

“The 30-times limit causes some controversy, there are arguments concerning the question of employing high-class specialists who earn above this threshold,” spokesman Piotr Mueller told the WP website.

“Maybe these arguments will convince us not to actually implement this solution,” he said.

The reform, which had met with criticism from both Deputy Prime Minister Jaroslaw Gowin and President Andrzej Duda, was forecast by the government to contribute over 5 billion zlotys ($1.30 billion) to the budget.

According to analysts, removing the reform would make it necessary to change the budget.

“We expect other expenses to be made more realistic ... and the central budget deficit will be set at around 10 billion zlotys,” ING analysts said in a note.

ING forecasts a general government deficit of around 0.5% of gross domestic product (GDP) in 2020 and about 2.0% in 2021.

Reporting by Pawel Florkiewicz; writing by Alan Charlish, editing by Ed Osmond

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