What will change in Polish KPO? The Minister of Finance will breathe because loan needs will decrease
The loan part of the national reconstruction plan is about PLN 148.5 billion in total. After the decision of the Council of Ministers, this amount will decrease by about PLN 21.5 billion.
As the Minister of Funds and Regional Policy explains Katarzyna Pełczyńska-Nałęcz, the decision to reduce the loan part of the KPO was made after reviewing the investment from the KPO. As a result, the government decided to give up some of the money for loans from KPO, which Poland could not use.
Government meeting in September 2025.
|
PAP / Piotr Nowak / PAP
Less pressure on public finances
How does this government's decision help the Minister of Finance? It reduces pressure on public finances, thanks to which you will not have to emit bonds.
According to Business Insider Polska, Deputy Minister of Finance Jurand Drop, “a reduction in this allocation in KPO reduces the loan needs of 2026, and thus has an impact on the reduction of public debt growth.”
The background of this case is outlined by Ernest Pytlarczyk, chief economist of Bank Pekao. As he explains in an interview with Business Insider Polska, at the end of August, when Polish loan needs were announced, the markets reacted negatively. These needs at that time increased from PLN 300 billion this year to nearly PLN 423 billion in 2026 – from this amount over PLN 100 billion results from the loan part of the KPO, which amounts to nearly PLN 150 billion – explains the expert. This charges public finances, because the KPO mechanism is that first Poland finances projects from KPO, and only then Brussels – in subsequent tranches – pays Warsaw money from KPO. Currently, Poland is waiting for the payment of about PLN 28 billion due to the fourth and fifth payment application, which the government submitted in December 2024. The payment is expected in November.
– It is the increase in loan needs by over PLN 100 billion resulting from the loan part of the KPO, is a number that frightened the markets – says Ernest Pytlarczyk.
Increased loan needs for markets more important than the perspective of ratings
In the opinion of Ernest Pytlarczyk, it was increased loan needs, not a negative perspective for Poland's rating in the assessments of the Moody's and Fitch agency was more important for markets. – The negative perspectives of the Polish rating did not impress, because Polish debt is mainly in Polish banks. We are also the fastest growing economy among large EU countries – says Ernest Pytlarczyk.
And concludes: – reduction of the KPO loan part – by over PLN 20 billion – would reduce the amount of Poland's loan needs in 2026, which investors were so scared. Markets will accept this movement only because this amount is decreasing.
Now it's time to negotiate the KPO revision with Brussels
The government's decision opens the process of revising the national reconstruction plan, which is to end before Christmas. The revision point regarding the reduction of the loan part of the plan will not encounter the resistance of Brussels. The negotiations of changes in KPO provisions regarding tributes from internal combustion cars or spatial policy will be a greater challenge. It is possible that the next and last revision of the KPO, which we can expect in spring, will further reduce the loan part of the plan. For the Polish government, the priority is the full use of money for grants from KPO, i.e. about PLN 113 billion. According to our sources, this goal is not threatened at this stage.
