Warsaw: A foundation led by Poland's free market pioneer Leszek Balcerowicz warned Monday that the EU member risks an economic crisis due to tax burdens and generous social benefits planned by the new conservative government.
The austerity-minded former central banker, known for implementing Poland's economic transition from communism to the free market in the 1990s, founded the FOR think tank which issued the warning in a damning report.
The government led by the Law and Justice (PiS) party -- in power since October after years in opposition -- has made a string of controversial decisions that "reduce the Polish economy's stability, while increasing the risk of a crisis scenario," the report said.
The PiS projects are "extremely costly and widely exceed the state's actual financial capacities."
Two global ratings agencies have already issued warnings over Poland's finances, including Moody's, which said in January that a PiS levy on banks threatens not only the sector's profitability but also the country's overall growth.
Standard and Poor's meanwhile downgraded Poland's long-term foreign currency sovereign credit rating by one notch to "BBB+" because of concerns over government reforms.
The PiS government has introduced a child allowance programme that promises families a monthly 500 zlotys ($130, 110 euros) for every child after the first.
The government has also promised to restore the retirement age to 65 years for men and 60 years for women, after the previous liberal government gradually pushed it back to 67.
Other economic pledges include introducing an hourly minimum wage of 12 zlotys and handing out free medication to residents over the age of 75.
To pay for the various programmes, the government has introduced new levies on banks and is preparing a turnover tax on supermarket chains and other retailers.
The nation of 38 million people has enjoyed economic growth each year since it shed communism a quarter century ago and has long been regarded as Central Europe's powerhouse.
AFP
