* OECD report leaves GDP growth forecast unchanged
* Target is for budget deficit of 3 pct of GDP in 2015
* Report says deeper spending cuts needed to achieve that
By Christian Lowe
March 10 Poland's government needs to make
deeper spending cuts if it is to meet its target agreed with
Brussels of getting the budget deficit under 3 percent of
economic output by 2015, the OECD said in a report issued on
The organisation of the world's most developed countries
left its forecasts for Polish gross domestic product (GDP)
growth unchanged, at 2.7 percent this year and 3.3 percent in
It said the economy, the biggest in central Europe, was
performing well after a sharp slump last year, but if it was to
meet longer-term challenges, Poland would need to make its
labour market more efficient and remove barriers to doing
The OECD said Poland needed to reverse its track record of
missing targets for cutting its budget deficit, especially if it
wants to exit the European Commission's Excessive Deficit
Procedure as planned in 2015.
Poland's general budget deficit widened to 4.8 percent in
2013 because of the slowdown in growth and over-optimistic
assumptions about tax revenues.
Mateusz Szczurek, named finance minister last November, has
pledged two years of austerity to meet the target.
A change in the pension system to transfer
assets from private funds on to the state books is to help.
But the OECD said: "Sticking to the target of 3 percent of
GDP for the 2015 deficit so as to ensure the government
debt-to-GDP ratio is firmly on a downward path would still
require additional fiscal tightening."
It said measures the government should consider included
reforming social security privileges for farmers, cutting back
more generous pensions for certain professions and tightening
the qualification criteria for disability pensions.
However those measures could be awkward for the government,
since in faces re-election in late 2015 and professions such as
farmers and miners wield big political influence.
On interest rates, the OECD said monetary policy so far had
been appropriate, but that as growth and inflation accelerated,
the central bank would need to consider bringing rates back up
from their current level of 2.50 percent, an historic low.
"The exact timing and scope of interest rate normalisation
should, however, depend on incoming data and the resulting risks
for the inflation target in the medium term," the report said.