Polish Finance Chief Quits After Vote to Boost Budget : Economy: Parliament fails to override court order on salaries and pensions. The outgoing minister sees disaster looming.

Poland’s finance minister resigned Wednesday in the wake of a defiant parliamentary vote that would increase state salaries and pensions and that threatens to throw the country’s budget negotiations into turmoil.

Andrzej Olechowski, in his post for two months, was the second finance minister to resign from the troubled government of Prime Minister Jan Olszewski, whose weak right-of-center coalition government has been further weakened by bickering in a Parliament composed of 29 parties.

Olechowski, a respected banking expert, warned the Parliament of economic catastrophe if it insisted on upholding a ruling by the country’s highest court that ordered cost-of-living increases in pensions and some state salaries.

A two-thirds vote of the Sejm, or Parliament, was required to overturn the high-court ruling, but strong lobbying by the prime minister and his finance chief--who had threatened to quit over the issue--failed to muster the necessary votes.

The shaky government’s future was in doubt, although Olszewski said he will continue to work for “a broader social agreement” from the Parliament.

Poland is involved in difficult negotiations with the International Monetary Fund as it attempts to win renewal of $1.6 billion in standby credits, which were withdrawn last year after the government failed to meet IMF-mandated targets.

Olechowski, in negotiations in Washington last month, won a tentative nod of approval from the IMF by pledging to hold the budget deficit to within 5% of gross domestic product, or about $4.4 billion.

In a news conference announcing his resignation, Olechowski said the cost of the increased pensions and salaries would add between $1.2 billion and $2 billion to the budget deficit.

After the vote, Planning Minister Jerzy Eysymontt, who had been among the government voices arguing strongly against the increases, said the payments might have to be deferred until next year “simply because there are no reserves.”

President Lech Walesa, who has promised a major address soon, has hinted that he thinks the government should resign. Last week, he suggested that he might ask the Parliament to pass legislation that would give the presidency broader powers, including the power to appoint prime ministers.

He also suggested that Olechowski and former Prime Minister Tadeusz Mazowiecki would be strong candidates for the premiership.

For some time, Walesa has been advocating a nonpartisan “government of experts” in order to break a parliamentary logjam that has blocked the Olszewski government from adopting a formal budget after five months in office. However, many of Walesa’s estranged former allies in the Solidarity movement are wary of any increase in his powers.

At the same time, political observers suggest that time may be running out for the virtually paralyzed Olszewski government, which has seen numerous defections among its ministerial appointments and a steady leakage of support among its coalition partners.