That's how many billions the government has in its accounts. This is a record reserve

Even in the event of negative developments in the Middle East, the Ministry of Finance should have no problems with covering this year's borrowing needs, wrote PKO BP bank strategist Mirosław Budzicki in a Friday comment.

“In Q1 2026, the Ministry of Finance placed wholesale treasury bonds with a total value of PLN 100 billion, of which PLN 9.5 billion in the switch auction formula. This sale was clearly higher than we expected, which allowed us to significantly increase the coverage of this year's borrowing needs,” wrote PKO BP bank strategist Mirosław Budzicki in a Friday commentary.

– “It is worth emphasizing that such a good result was achieved despite the outbreak of the conflict in the Middle East and the decline in demand for securities offered in March,” he wrote.

He recalled that the outbreak of the war sharply increased the volatility on the debt market and forced “tactical adjustments” on the part of the Ministry of Finance. It was about, among other things, to cancel one of the auctions, change the formula of another or limit the supply of securities. He also added that according to PKO BP forecasts, the Ministry of Finance will sell securities worth nearly PLN 89 billion in the second quarter of 2026, of which PLN 16 billion in the form of switch auctions.

“The volume and structure of securities sales will largely depend on further developments in the Middle East. In the baseline scenario, we assume that the increased risk aversion will continue in April, after which there should be a clear de-escalation later in the quarter. This became more likely after the news about a two-week truce in the conflict in the Middle East. In such a scenario, the expected issuance plans do not seem to be at risk, and the new sales should have a neutral impact on the market secondary,” wrote a PKO BP economist.

He assessed that The conflict in the Middle East that has been ongoing since the beginning of March has “limited impact on the cost of servicing Poland's debt.” He recalled that at that time, the Ministry of Finance, among others, issued bonds worth PLN 17.2 billion.

“The annual increase in costs can be estimated at only PLN 0.3 billion, assuming that de-escalation will take place within a few weeks. An additional burden on the state budget is also caused by reductions in VAT and excise tax rates (approximately PLN 1.6 billion per month) and, indirectly, inhibition of the process of monetary policy easing by the NBP,” Budzicki wrote.

In his opinion, current price levels “are definitely more attractive and motivate purchases in the longer term”, although “investors are aware of the risk of a reduction in the country's credit rating on the occasion of the periodic autumn review.”

“It is worth mentioning that even in the event of negative developments in the Middle East, the Ministry of Finance should have no problems with covering this year's borrowing needs. According to data as of the end of March 2026, they were 41% financed. Moreover, the Ministry of Finance has funds in the budget accounts amounting to PLN 170 billion, and reducing this reserve even to approximately PLN 100 billion would not pose a major problem from the point of view of the security of state debt management,” Budzicki wrote. (PAP)

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