Budget Deficit and the Crisis of the Public Finance in Poland

Abstract

The present crisis of the public finance with its deepen in of the budget state deficit in Poland has caused animated economic discussions about its origin reasons and negative effects which Polish government will must be manage the next years with. Surely, it will be a truism and insufficient explanation of this subject when it affirmed that the high increase of budget deficit became a main reason of state financial problems. That statement automatically implicates other following questions: - Is occurring budget deficit being inseparably connected to crisis of the public finance? But, a budget deficit is not exceptional component in budgets of many developed countries or many developing countries living through the economic growth. - The most suitable question is then: How growth of the deficit can say, that is the main reason of the crisis? - Budget deficit never arise from a void, there have to appear other factors, which determine it, so contribute to indirect creation of the crisis in this way. Is budget deficit a homogenous process? - So, if there are exist, in fact, maybe it means that budget deficit is only a next stage or a symptom of approaching crisis? - Generally, is there any possibility or connection between current crisis the of public finance in Poland and high level of budget deficit? As it seen, the foregoing questions indicate about complexity of the analysed subject. Even if we are trying to get to the point of it, only partly we will have to take into consideration of many variety factors: economic, legal, social or political which are connected and affecting themselves. This is why on the basis of the mutual relationships many domestic market economies and whole world market economy are operating, making big communicating vessels system. Even a little change one of all is causing chain reaction of the whole system. Defining all the factors bringing about the budget deficit, analysing current situation of Polish economy additionally, it makes possible to get to the heart of the matter, in which helps us chart 1 „the causal chain reaction of budget deficit in Poland”. Many reasons involved there and their varieties (origin - secondary, indirect – direct, legal – economic – social) let to give us negative answer about homogeneity of the budget deficit. The limited size of this paper cannot give us a sufficient explanation of all reasons, that’s why the author tries to focus his attention on these which are the most important. However, at the beginning of this paper, it is possible to venture to express an opinion that all the factors causing decreased budget revenue without a correction of budget expenses scale at the same time created highly negative balance of Polish budget state in 2001 and lots of problems with a budget bill of 2002. Furthermore, wrong economic assumptions during creating the 2001budget bill, wrong budget policy in the middle of its execution and lack of state financial discipline brought about two amendments in July and December last year by rising budget expenditure and thereby level of the budget deficit of 60,6 %, comparing to this value in budget act before amendments (graph 1). In the end of the introduction we have to look at another important issue, which can be essential for the following analysed problems later. Namely, it is meaning about the relations between budget state deficit, deficit of the whole public finance sector and economic deficit. The paper treats budget state deficit mostly; which is a component of these values. That paper’s conception can be a ground for charging with some included explanations are not credible until the end in the light of global character of public finance. In author’s opinion it won’t diminish of the science credibility of the paper. According to the Ministry of Finance data of 2001 the budget deficit of Poland is almost 90 % of the whole economic deficit that proves about its enormous influence on Polish public finance. But in these fragments of the paper, where it turns out sensible it will be taken into consideration the budget deficit value of the whole public finance sector.