Poland, the largest country of the European Union on the eastern Flanka NATO, has tripled the deficit level over the past three years. In 2024, the government repeatedly corrected its height up, ultimately setting it at 6.3 percent. GDP. This is largely due to the need to finance arms in the face of war in neighboring Ukraine.
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The government declared that it would allocate 5 percent to defense. GDP, which drastically limits the field of maneuver in other areas. As reported today by “Puls Biznesu”, Donald Tusk's government can give up some tax increases.
The situation is additionally complicated by the political system – Many government projects are blocked by the new President Karol Nawrocki, associated with the opposition. Last week he vetoed, among others Act on energy prices and facilitations for investments in renewable energy sources.
During Wednesday's talks at the Presidential Palace, Prime Minister Tusk emphasized that Poland was balancing on the border of the permissible level of debt. Public debt according to national methodologies is approaching 55 percent. GDP. Exceeding this threshold would launch automatic budget brakes and could mean the need to introduce drastic fiscal consolidation before the parliamentary elections in 2027.
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Poland's budget deficit. Calm in the markets for now, but economists warn
For now, financial markets are reacting calmly – Treasury bonds are in demand, and the profitability of ten -year papers has fallen from the beginning of the year by nearly 50 base points. Rating agencies and investors focus on a strong external position of Poland and relatively resistant economic growth.
Economists warn, however, that the patience of EU markets and institutions in the face of maintaining a high deficit will not be unlimited. – The key question is whether we will see real fiscal consolidation or the patience of markets, Brussels and rating agencies will be put to the test – says Piotr Bielski, cited by Bloomberg, chief economist Santander Bank Polska.
Wednesday's session on the bond market showed growing nervousness – the profitability of Polish ten -year -olds increased to 5.43 percent, at most for three weeks. This means 274 base points of advantage over German bundos.
