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UPDATE 2-Poland expects 109.3 bln zloty budget deficit in 2020 due to virus

(Adds details from news conference)

WARSAW, Aug 20 (Reuters) - The Polish government has accepted a revision to the country’s 2020 budget that forecasts a deficit of 109.3 billion zlotys ($29.4 billion), it said on Thursday, highlighting the impact of the coronavirus pandemic on the public finances.

Before the coronavirus reached Poland, the government had planned this year to have its first balanced budget in three decades. But it was forced to ramp up spending to support the economy as it introduced sweeping lockdown measures, which lowered tax receipts.

“The spread of the coronavirus contributed to the greatest economic crisis of recent years, which dramatically slowed economic activity in Poland and other countries affected by the pandemic,” the government said in a statement.

Finance Minister Tadeusz Koscinski had previously said the deficit in the amended budget would be 100 billion zlotys.

The revised budget envisages that in 2020 Poland’s gross domestic product (GDP) will contract by 4.6%. Previously it was expected to grow by 3.7%.

Deputy Finance Minister Piotr Patkowski told reporters that if there was a revision to the GDP forecast, it would be to the upside.

“Everything indicates that in a further wave of the coronavirus... there will not be a complete lockdown but only shutdowns of specific sectors,” he said.

The unemployment rate is set to rise to 8%, from the 5.1% predicted before the revision, and inflation is forecast to be 3.3%.

Budget revenues will amount to 398.7 billion zlotys, 36.7 billion zlotys less than expected, and expenses 508 billion zlotys, 72.7 billion zlotys more than originally planned.

Patkowski said the 2020 general government deficit would probably be bigger than the 8.4% that is in the updated convergence plan submitted to the European Union. ($1 = 3.7203 zlotys) (Reporting by Alicja Ptak, Alan Charlish, Pawel Florkiewicz and Anna Koper; Editing by Toby Chopra/Angus MacSwan/Jane Merriman/Alex Richardson)

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