La publication simultanée, au cours des dernières semaines, des prévisions économiques de la Commission européenne, du FMI et de la Banque mondiale a permis de mettre à jour les informations disponibles concernant le niveau attendu des déficits budgétaires des nouveaux Etats membres pour l’année 2005, peut-on lire dans cet article de la Revue Elargissement.
According to the CP, the deficits of the public authorities (APU) will continue to converge towards the thresholds fixed by the Maastricht criteria. Nevertheless, for some countries, opinions about this convergence may differ, in particular because of revised growth prospects.
At the end of 2005, five of the ten NMS might, as in 2004, abide by the threshold of a maximum deficit of 3% of GDP for the APU: Cyprus, Estonia, Latvia, Lithuania and Slovenia.
The Spring economic forecasts from the Commission, the World Bank and the IMF have confirmed or revised their growth forecasts upwards (2005) for the CEEC, except for Poland. For this country, whereas the CP presented at the end of 2004 relied on the presumption of a 5% growth, the Commission and the World Bank believe this will currently only reach 4.4%, or even 3.5% according to the IMF (and several bank analysts).
All things being equal, the revision of Polish growth cannot help but influence forecasts about the APU deficit. Indeed, taking into account the weight of the obligatory levy (44.3% of GDP in 2003), any 1% variation in GDP might, in the first analysis, be expressed by a variation of 0.4 to 0.5 of a GDP point in the States’ receipts.
In comparison with the latest growth forecasts, it is thus in Poland that the risk of overshooting the 2005 public deficit objective appears the most serious. This would have two types of consequences.
With regard to nominal convergence, Poland is reported to be moving a little further away from the Maastricht criterion related to public finance and thus from its prospects of adopting the euro. This could, moreover, involve a resumption of the excessive deficit proceedings**. But afterwards the incentive to reform the structure of the budget could be strengthened by this “deviation”.
Between the time when excessively high deficits are observed and that when reforms are undertaken, the risk premium of the countries concerned could increase on financial markets. Between October 2004 and March 2005, the 5 year in 5 year forward rates on the Polish debt clearly decreased, as expected and contrary to what happened in Hungary (see REA 69), primarily because of a deceleration in inflation: indeed, the spread with Euro rates passed from 148 Bp to less than 100 currently. Thus, without questioning the convergence process of the long term rates, the appearance of a pessimistic growth scenario could bring a little more volatility back to the interest rate markets and, possibly, increase the weight of the debt payments.
Can the CEEC expect an improvement in their budgetary situation due to the EU funds? The transfers of funds from the Union to the NMS will have a (roughly) neutral impact in terms of national budget accounting. This is precisely the “philosophy” behind these transfers.
The calculations made by the Commission indicate a slightly positive impact on the budgets of the CEEC, which are reported to range between +0.1% and +0.5% of GDP. These calculations include the needs created by the cofinancing of projects carried out within the framework of EU funds.
These calculations were based on the assumption that full use would be made of European funds, with the risk that this would not in fact be made (see REA 67). Lastly, the additionality condition associated with the structural funds will probably imply, for Poland in particular, that the structure of the national budget continues to be reformed, in order to release the budgetary needs for the cofinancing of the cohesion and structural funds.
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