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EU Urges Poland to Cut Budget Deficit

EU finance ministers meet Tuesday to tell Poland to do more to cut its budget deficit below a 3% ceiling this year.

The Polish deficit is expected to hit 4.6% in 2007, a figure recalculated upward as the country has to count in pension-funded schemes from this spring.

The European Commission warned earlier this month that Warsaw's spending is "a cause for concern."

It asked ministers to back its recommendation that the Polish government should revise budget plans to bring its deficit under 3% of gross domestic product this year.

Polish efforts so far do not seem adequate, the commission said, and planned action appears insufficient, claiming the deficit could worsen despite strong growth because the government is not doing enough to reform spending.

Ministers are likely to give Poland six months until Aug. 27 to take action to curb the deficit.

They are also due to warn Italy that it must stick to its budget plans for the year as debt soars, criticizing Rome for not giving details on how it would manage debt after 2007.

Any harsh words come at a critical time for Italian Prime Minister Romano Prodi's government, which is operating in a caretaker role.

Prodi offered his resignation which was rejected by Italy's president this weekend after the center-left coalition was defeated last week in a foreign policy vote that leaves him with only a razor-thin majority in the Senate.

Italy's budget deficit rose to 5.7% last year but is targeted to sink to 2.8% in 2007 as growth picks up.

Ministers meet every month to discuss Europe's economy as it enjoys good growth and low inflation. EU Economic and Monetary Affairs Commissioner Joaquin Almunia is urging countries to use these good times to pay off debt and put their budgets on a solid footing for the future.

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