Poland's Fiscal Policy in the Light of the Stability and Growth Pact (SGP)

In the paper, the place and the importance of the fiscal criteria and the excessive deficit procedures (EDP) within the set of theMaastricht convergence criteria, as well as their basic importance for the Stability and Growth Pact (SGP)were presented. Also, the evolution of the attitude of the EU zone countries towards these criteria before the birth of the euro zone and after its birth in 1999was presented. The extent was examined to which the Maastricht Treaty criteria and the SGP provisions were applied in the period of 1999-2003 by the EU organs when assessing the fiscal policy of individual countries under the excessive deficit procedure. Despite the fact that the admissible ceiling of the deficit-to-GDP ratio had repeatedly been considerably overstepped by themajority of the euro zone countries, no sanctions or penalties were ever applied. The EU organs confined themselves only to the so-called early warning to the countries that chronically stayed in the zone of excessive deficit. The primary reason for the EU organs' abstention from applying the Treaty criteriaand the SGP provisions was the fact that the Maastricht Treaty had adopted thenominal deficit as the basis for the assessment whether and to what extent thegiven country had infringed the fiscal discipline. Whereas, in a situationwhere the GDP is growing more slowly than the potential rate of growth, it is necessary, in order to avoid adverse consequences of a restrictive fiscal policy, to be guided by the structural rather than nominal deficit. Despite the infringement of the principle of avoiding an excessive deficit by the biggest eurozone countries and the lack, even in cases of drastic infringement of the fiscaldiscipline, of applying the sanctions and penalties foreseen by the ExcessiveDeficit Procedure, both the EDP and the Stability and Growth Pact have fulfilled their function of non-discretionary (i.e. based on fixed rules) tools ofpublic finance improvement both in the euro zone and throughout the EU, as the ED procedure applies to all the EU member countries. It was against thisbackground that the Polish programme of fiscal convergence for 1995-1997, being a part of the general convergence programme filed in connection with thecountry's EU accession, was analyzed. The analysis has shown that, among thetasks under the above convergence programme, there are some that can proveto be the very difficult to implement: firstly, the adjustment of the Polish regulations (inclusive of the constitutional provisions) governing the position of thecentral bank to the requirements of the Maastricht Treaty, the ECB constitution and the statutes of the European System of Central Banks; secondly, theneed to accept after 2007, i.e. at the time when Poland's membership of theeuro zone can become practical, that the Open Pension Funds (OPFs) do notmake a part of the public sector and, consequently, the resources gathered bythem are not public funds and, thereby, the liabilities of the Social InsuranceFund to the OPFs are public liabilities that augment the ratio of the public sector deficit and the public debt to the GDP.