Friday, October 12, 2012

Poland's Tusk unveils big investment plan to ease downturn

By Dagmara Leszkowicz and Pawel Sobczak

WARSAW (Reuters) - Polish Prime Minister Donald Tusk offered voters a big programme of investment on Friday in an effort to revive the slowing economy and halt a slide in his own popularity.

Tusk said trying to nurse spluttering economic growth was his priority, and that he would find billions of euros for investment in energy and other infra-structure projects.

In a signal to markets concerned that Tusk should not stray from his policy of prudent fiscal policy, he said the investments would not add to the debt or deficit in Poland, eastern Europe's largest economy.

"There is no other way for Poland than sustaining growth through investments," Tusk told parliament in a speech. "Poland has a real chance to defend economic growth and make it translate into more jobs."

Officials said state assets would be transferred to state-owned bank BGK, and that this will be used to leverage 40 billion zlotys ($12.66 billion) in investment for infra-structure projects up to 2015.

Reuters reported last week that a plan for a "guarantee fund" was under discussion in the government. Under that plan, the guarantees would be in a non-state vehicle and so would not be classified as debt.

Poland's economy will slow to 2.1 percent growth next year, the central bank forecasts. That is still healthy by the standards of its European neighbours but a big drop for a country that last year grew more than twice as fast and had been viewed by markets as a rare bright spot in Europe.

The slowdown has hurt Tusk's popularity, with polls showing his party had been overtaken by the opposition Law and Justice Party.

In a measure likely to please voters, Tusk in his speech announced that maternity leave would be extended and resources would be put into child-care. That was met with a round of applause from lawmakers listening to the speech.

Poland has until now managed to defy the downturn elsewhere in Europe, mainly by pouring huge sums of European Union money into roads and other infra-structure. It is the only EU country not to have slipped into recession in the past four years.

But Poland has spent most of the EU money, and the next round of cash from Brussels will not kick in for two years, so Tusk needs to find other sources of funds quickly.

(Additional reporting by Marcin Goettig, Karolina Slowikowska, Adrian Krajewski; Writing)

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Friday, October 12, 2012

Poland's Tusk unveils big investment plan to ease downturn

By Dagmara Leszkowicz and Pawel Sobczak