In an effort to avoid potential political squabbling during Poland’s presidency of the EU in the latter half of this year, the government is already debating the budget for 2012.

“Due to the situation of Poland’s public finances, next year’s budget plan envisages considerable savings, which have in part been put in place by the European Commission as a mechanism to counteract what it calls an excessive deficit,” Malgorzata Brzoza, spokesperson of the Finance Ministry, told Polish Radio.

Apart from having cut expenses and raising taxes this year, the government has also introduced a measure whereby it limits expenditure to 1 percent above inflation.

Other methods to stem rising debt have included a freezing of income tax brackets, as well as a hike on cigarette duty and the riddance of tax exemption on fuel biocomponents.

Earlier, the government raised VAT on goods and services to 8 and 23 percent, with a new 5 percent VAT being levied on books as of the beginning of May this year.

In its budget proposal sent out to ministries on Monday, the Ministry of Finance proposes a budget deficit amounting to 35 billion zloty (8.9 billion euro), envisaging income amounting to 292.7 billion zloty and expenditure set at 327.7 billion zloty.

The 2012 budget estimates a GDP rise of 4 percent and average annual inflation set at 2.8 percent, with unemployment at the end of next year expected to amount to 10 percent. (jb)