March 2 (Bloomberg) -- Poland's reported budget deficit may rise after European Union accounting experts barred governments from classifying payments into state-run defined-contribution pension plans as revenue, the EU said.

The ruling by Eurostat, the EU's Luxembourg-based statistics agency, may force Poland to revise up its target for a deficit of 5.3 percent of gross domestic product in 2004. Sweden, Denmark and Slovakia may also have to reclassify revenues.

``The unit managing the scheme must be classified as a public financial corporation,'' Eurostat said in an e-mailed statement. ``The flows of contributions and benefits under the scheme are not recorded as government revenue or expenditure and do not have an impact on the government deficit or surplus.''

The ruling adds to pressure on Polish Prime Minister Leszek Miller to cut spending or raise taxes to bring the budget gap closer to the 3 percent limit needed to adopt the euro later this decade.

Payments into defined-contribution plans cannot be classified as regular revenues because the government invests the money on behalf of contributors and doesn't incur a liability, Eurostat ruled.

Using the same logic, future payouts to retirees wouldn't be classed as expenses that boost the deficit. The ruling applies to current EU members as well as to Poland, Slovakia and eight other countries joining the bloc in May.

Poland's biggest opposition party said yesterday it will reject the minority government's plan to cut spending by $13.9 billion through 2007, potentially spelling Miller's downfall.

Poland used a surplus of 1.7 percent of GDP in its ``open'' pension funds to bring its deficit down to an estimated 4.3 percent of GDP in 2003, the European Commission said in October. Its forecast of 5.9 percent Polish deficit for 2004 didn't take account of today's ruling.

Eurostat is unlikely to settle on a method of recalculating the Polish figures by the time it issues official 2003 deficit figures on March 15, commission spokesman Gerassimos Thomas said today.

To contact the reporter on this story: James G. Neuger at jneuger@bloomberg.net

Last Updated: March 2, 2004 05:00 EST