* Polish economy, rare EU bright spot, is slowing sharply
* Tusk says to use state assets to leverage investment
* Pledges to keep debt, deficit at safe levels
(Adds potential drawbacks of funding mechanism)
By Dagmara Leszkowicz and Pawel Sobczak
WARSAW, Oct 12 (Reuters) - Polish Prime Minister Donald Tuskannounced a big programme of investment on Friday aimed atreviving the spluttering economy and shoring up support fromvoters worried that two decades of uninterrupted growth arecoming to an end.
Tusk said he would find billions of euros for investment inenergy and other infrastructure projects, while at the same timekeeping a tight rein on government borrowing in Poland, easternEurope's largest economy.
Poland has been a rare bright spot in Europe over the pastfew years, managing to sustain robust growth even while itsneighbours slumped. But growth will slow next year to just over2 percent, half the figure for last year.
"There is no other way for Poland than sustaining growththrough investments," Tusk told parliament. "Poland has a realchance to defend economic growth."
"We will fight to ensure debt and deficit stay at safelevels," he said in his first big set-piece speech setting outthe government's response to the slowdown.
Investment in road-building and other infrastructureprojects has driven Polish growth up to now, yet the Europeancash that paid for it will dip over the next two years.Borrowing to fill the gap would drive up debt and dent Poland'sreputation for fiscal prudence.
The solution outlined by Tusk is to channel state-ownedassets, including company shares and privatisation revenue from2014, into a special fund which will use these assets tounderwrite private investment. The fund will be administered bystate-controlled bank BGK.
"According to calculations ... we should create leverage forinvestments and credits worth around 40 billion zlotys ($12.66billion) to 2015 and around 90 billion if we count over sixyears," Tusk said.
Reuters reported last week that the government wasconsidering creation of a fund of this kind - broadly modelledon schemes already operating in Brazil and South Korea.
Under the scheme that was under consideration, the assetsunderwriting investment would be in a non-state vehicle and soits liabilities would not be classified as state debt, allowingthe government to meet its targets for cutting borrowing.
"The prime minister managed to solve a few problems. Heannounced a major investment programme that will underpin theeconomy," said Maciej Reluga, chief economist at Bank ZachodniWBK.
"At the same time, he offered a mechanism that will ensuredebt and deficit levels aren't affected. Rating agencies andmarkets should be happy."
The plan does have drawbacks. People working on creating thefund acknowledge it could take a long time to set up. Polandneeds cash right now, so the government may have to come up withother ways of getting short-term money.
The fund also involves the state taking on substantial risk.If, for example, a new power station underwritten by the fundturns out to be loss-making because of changes in EU emissionsrules, the state would have to compensate investors' losses.
Poland is the only country in the EU that did not slip intorecession since the start of the global financial crisis fouryears ago.
The global downturn is now making itself felt. Unemploymentis ticking up. Offices and apartments built on a wave ofconfidence in Poland's "economic miracle" are now standingempty.
The slowdown has hurt Tusk's popularity, with polls showinghis party had been overtaken by the opposition Law and JusticeParty. Fading public support could make it harder for him tohold together his governing coalition between now and the nextelection in three years.
In a measure likely to please voters, Tusk announced thatmaternity leave would be extended and more help provided tofamilies with children. That was met with a round of applausefrom lawmakers listening to the speech.
"It's a good anti-crisis and pro-family instrument," saidMalgorzata Krzysztoszek, economist with the Lewiatan businesslobby. "The prime minister told Poles: 'Hey, the labour marketis tough but you can wait it out. Your job will be protected, gohave a baby."($1 = 3.1604 Polish zlotys)
(Additional reporting by Marcin Goettig, Karolina Slowikowska,Adrian Krajewski; Writing by Christian Lowe; Editing by PatrickGraham and Toby Chopra)
Keywords: POLAND TUSK/