2020 Govt spending budget will be balanced: Dep Fin Min

The budget pledges balanced spending and revenues on the level of PLN 435.3 bn and a general government deficit of 1.2%, the Deputy Finance Minister Tomasz Robaczyński told parliament on Thursday.

Mr Robaczyński deflected opposition criticism that the budget foresaw a 1.2 percent deficit, the equivalent of PLN 50 bn, despite being billed as being balanced. He explained that this was the difference between central government spending and local government spending.

Voting on the 2020 budget, which foresees that the economy will grow by 3.7 percent this year, and inflation of 2.5 percent, has been delayed while the government finance committee mulls amendments raised during the second reading of the draft in parliament on Wednesday.

The minister was not optimistic about the acceptance of the amendments, including further increases in health care cover, all of which he said would require an additional PLN 22 bn (EUR 5.2 bn) of spending. Five percent of spending is to go on health, which is low to an OECD average of 8.8 percent, despite overall increases in outlays.

The budget envisages significant increases in social spending, in order to cover additional expenditure for policies passed last year, such as removing means testing for recipients of the 500+ child benefit, raises in support for the disabled and provision of bonuses for pensioners. The lowest income tax threshold was cut by one percentage point to 17 percent, while those under 26 no longer have to pay tax on earnings below PLN 7,000 (EUR 1640) per month.

Covering expenditure Unable to gain support for a policy of raising the social security payments of the better-off for fear of stymying efforts to attract highly-paid service sector jobs to Poland, the government has filled the gap by increasing duty on alcohol and introducing new taxes on sugar, both of which ostensibly have a healthcare aspect.

Lobbyists for the food industry took out a two page advertising spread in national newspapers on Wednesday, arguing that the effects of taxes on diet and health are negligible, while consumers will turn to cheaper imported foods.

Further revenue will be provided by allocating profits made on the reserves of the National Bank of Poland on gold last year, while one-off fees from participants of 5G mobile phone network tenders are also being counted into the pool.

Some economists, such as the Business Center Club’s Prof Stanisław Gomułka have pointed out that counting one-off revenue to the annual budget runs the risk of running into problems in 2021, if such sources are no longer available.

Development Minister Jadwiga Emilewicz said on Polish Radio that she was confident that 3.7% GDP growth was obtainable, as the “tornado” billed to hit the Polish economy was not likely to be as severe as predicted. The European Commission maintained its earlier forecast of 3.3 percent growth for Poland in 2020 and 2021 on Thursday.