FINANCING THE BUDGET DEFICIT ON THE CAPITAL MARKET
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In the most recent history of Poland, the budget deficit in 2002 hit a low of nearly 40 bilion zloties. In the years under inspection the rising deficit created an increased need for loans. One of the major sources of the budget financing is the issue of treasury bonds. The regularly rising budget deficit was accompanied by a regular increase in bonds' interest. Consequently, the high interest of treasury bonds raised the costs of acquiring financial means by companies issuing bonds and shares. It results from the fact that treasury bonds are regarded as securities of the lowest investment risk whereas companies shares are characterized by a higher risk.
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