According to forecasts, from 2028, the entire budget of the Ministry of National Defense will be allocated to the current maintenance of the army and to servicing the debt currently incurred for the purchase of new military equipment – says Tomasz Dmitruk from “Dziennik Zbrojny”. In this situation, further modernization of the army may be questionable.
Legislative work on the state budget for next year is nearing completion. After work in the Senate, which proposed amendments to it, the budget bill returns to the Sejm. According to the assumptions, a record amount of over PLN 200 billion will be allocated to defense in 2026, which will translate into over 4.8 percent. GDP and approximately 21.7 percent total state expenditure. These expenses come from two sources – part of the state budget managed by the Ministry of National Defense, and the Armed Forces Support Fund – an instrument managed by BGK, the aim of which is to support the financing of the technical modernization of the Polish Armed Forces, including primarily the purchase of new equipment.
Ddebt to be repaid: over PLN 40 billion in annual interest
In an interview with PAP, analyst Tomasz Dmitruk from “Dziennik Zbrojny”, a specialist, among others, in the field of financing the Armed Forces, pointed out that these expenditures are only a plan: while every year the Ministry of National Defense manages to implement the expenditure plan from the budget part in full or almost in full, the annual implementation of the expenditure plan from the Fund for Social Welfare has so far been quite far from 100 percent. plan.
According to the analyst, from documents published by the Ministry of Finance it can be concluded that the expected implementation of expenditure from the Social Fund will amount to approximately 60-70 percent this year. plan, which will translate into lower expenses by approximately PLN 25-30 billion. – he recalled – the Fund also achieved similar results in 2024, and earlier the percentage implementation was even lower.
Dmitruk noted that budget expenditures are planned at the level of approximately PLN 125 billion (of which approximately PLN 3.3 billion is the planned payment to the FWSZ), and expenditure from the Fund is planned to be approximately PLN 79 billion, including the budget contribution – this means that the government plans to spend 3% on defense. GDP from the budget and 1.8 percent GDP from the Fund. As the expert pointed out, the implementation of the FWSZ depends, among others, on: on whether the government manages to obtain favorable financing – e.g. low-interest loans – for individual orders of military equipment.
Modernization is questionable
The expert noted that each year the FWSZ is becoming an increasingly important source of financing for contracts for new military equipment, while budget expenditure is increasingly going towards the current maintenance of the army and servicing the debt generated by the FWSZ.
According to Dmitruk, currently the Armament Agency – the institution responsible for the purchase of new equipment for the Polish Army – is implementing contracts worth over PLN 600 billion, of which – as he estimated – about PLN 150 billion is the amount already paid, and over PLN 450 billion is the amount remaining to be repaid in the coming years. In addition, he added, over 60 percent the amount remaining to be repaid is placed within the Fund.
This means that a debt will have to be incurred for this purpose, which will be repaid by the Ministry of Defense from its budget in the coming years, the expert emphasized.
As he said, the Polish Ministry of Finance is of the opinion that the Ministry of National Defense should be responsible for repaying the FWSZ debt from its budget. However, the annual cost of servicing the FWSZ debt, according to the forecasts of the Supreme Audit Office, is to amount to over PLN 40 billion, starting from 2028.
In a situation where the Ministry of National Defense would be responsible for the repayment of this amount – the expert explained – any further purchases of equipment for the army could be questionable, as repayment of the debt will consume most or almost all of the funds.and which the ministry has at its disposal for the modernization of the army, partly from the state budget. To make further purchases possible, it will be necessary to obtain additional debt funds.
In the face of growing debt (both the state public debt of the PDP and the debt of the general government sector EDP) – which may approach the limit of 60% in the coming years. GDP for a given year – further expenditure on new equipment for the Polish Army may be questionable, as the increase in FWSZ debt has a direct impact on the increase in EDP debt. Dmitruk, however, pointed out that the increase in state debt had so far resulted only in a relatively small part from increased defense spending. While from the beginning of 2022 to the end of the third quarter of 2025, EDP's debt increased by as much as PLN 811 billion, FWSZ's debt accounted for only 7.5%. this amount (i.e. PLN 61 billion).
The EU's lifeline: SAFE. This is help, but also on credit
To some extent, the situation may be saved by the EU's SAFE instrument, under which Poland may receive over EUR 43 billion for further army modernization projects. However, this money is also loans – the expert noted – which the state will have to repay sooner or later. Dmitruk estimated that the release of these funds may postpone by 2-3 years the moment when there will be no funds for further purchases of equipment, while loans from SAFE will increase the state debt (i.e. EDP) in the same way as other loans from the Fund. The advantage, however, – said the analyst – is the postponement of the commencement of capital repayment by 10 years, low interest rate and the possibility of extending repayments until 2070.
As Dmitruk said, in this situation, the Ministry of Finance will probably strive to limit further loans for military equipment under the Fund in order to keep the entire public debt in check. Dmitruk also assessed that in a situation when the Ministry of National Defense budget will be increasingly allocated to maintaining the army and servicing the debt, and the Ministry of Finance will limit the possibility of taking out new loans and will not want to spend more than 3% of GDP on defense from the state budget, further modernization of the army may be questionable.
Painful verification of plans: 4 instead of 6 divisions
When asked whether the current financial prospects for the Ministry of National Defense and the army allow for the expansion of the Polish Army that is currently planned – i.e. up to 300,000. soldiers and the 6th division of land forces – Dmitruk said that it doesn't seem reale; As he estimated, at the current level of expenditure it is possible to properly equip 4 divisions of land forces, supplemented with some form of reserve structures.
According to expert estimates, the equipment required by the Polish Armed Forces until 2035, which has not yet been ordered, will cost another PLN 500 billion; this includes, for example, two more squadrons of combat aircraft, air tankers and transport planes, Sajna radars, dozens of new helicopters of various types, as well as hundreds of new combat vehicles, including Rosomaks, Badgers and more K2PL tanks.
Dmitruk also pointed out that an increasing part of the Ministry of National Defense's expenses are expenses for the current maintenance of the army.
It can be safely estimated that after 2028, the Ministry of National Defense budget will mainly be used to cover the current costs of maintaining soldiers, their food, supplies, training and pensions, as well as the costs of operating equipment, plus the costs of repaying the FWSZ debt, he said.
He assessed that such a scenario would de facto assume the suspension of military modernization. – If there is to be any development or further purchases of equipment, it will have to be covered by the Social Fund or SAFE. So, again on loan – noted the analyst.
However, Dmitruk pointed out that Debts incurred now may prove to be less of a burden in the future than they are now – in a situation in which the Polish economy and the financial capacity of the state will consistently grow. Another scenario is a hypothetical reduction of threats and stabilization of the international situation – so that large defense expenditures no longer have to be the government's priority, but the chances of this happening are slim.
As he said, deciding how much the Polish state should actually allocate for defense and military modernization comes down to deciding to what extent the Ministry of National Defense should indicate to the Ministry of Finance how much funds it needs for effective defense – and the task of the Ministry of Finance is to find these funds – and to what extent the Ministry of Finance should indicate to the Ministry of National Defense how much the state is able to allocate for armaments.
– Of course, the optimal solution probably lies somewhere in between. A constant dialogue is needed between the Ministry of National Defense and the Ministry of Finance on how much money can be spent on defense without killing the economy or social issues. Currently, the situation is already tense. (…) For now, SAFE will probably be a lifeline and until 2027 – when the elections will be held – it will be possible to maintain an apparent stabilization of defense spending, but the development of the Polish Army on credit cannot be carried out in the long term – warned Dmitruk.
Mikołaj Małecki (PAP)
mml/ par/
