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POLAND yesterday said it was the first European country to issue government bonds in China, opening the door to new sources of financing as Warsaw plans to run a record deficit next year.

The Polish finance ministry said in a statement it had issued three-year yuan-denomiated bonds worth three billion yuan (US$451 million). It also revealed that earnings “were swapped into euros.”

“After securing the necessary permission from Chinese regulators, we became the first European country to issue Polish bonds on the Chinese market,” the statement said.

The move comes after the Polish government said on Monday it would raise spending next year to just under an European Union-wide cap of 3 percent of GDP, while also cutting growth forecasts for central Europe’s largest economy.

“Emitting bonds on the Chinese market was aimed above all at diversifying our investor base and acquiring financing to cover this year’s loans,” the ministry added.

The government won an October 2015 election on promises of generous social spending — including a universal child benefit scheme — raising concerns it could bloat Poland’s moderate public debt.

The ministry pegged the 2017 deficit at 2.9 percent of GDP in a Monday statement, or 59.3 billion zloty (US$156 billion).

The figure totals around 5 billion zloty more in deficit spending over 2016, Poland’s Puls Biznesu financial daily reported.

The ministry also pared its growth estimate for 2017 from 3.9 percent to 3.6 percent, with average annual inflation set to hit 1.3 percent. It also revised its growth forecast for this year to 3.4 percent, down from 3.6 percent.

The International Monetary Fund said in July it expected spending to increase “the budget deficit to 2.8 percent of GDP in 2016 and to over 3 percent of GDP in 2017”, compared to 2.6 percent in 2015, before a planned return to fiscal consolidation from 2018.

It also said growth would accelerate to 3.7 percent in 2017 from an estimated 3.5 percent this year, thanks to “strong private consumption supported by the new child benefit scheme, before moderating over the medium term”.