Over PLN 200 bn funding to stave off COVID-19 recession

Poland will launch a PLN 212 bn (EUR 47.31 bn) package of measures protecting businesses and employees against the adverse effects of the spread of the coronavirus epidemic, the President and the Prime Minister announced after a top level meeting on Wednesday.

President Andrzej Duda on Wednesday morning chaired the Cabinet Council, a consultative body comprising the president and the government. The proposed package is estimated at PLN 212 bn (EUR 47.31 bn), Prime Minister Mateusz Morawiecki said, adding that the money is in addition to EU funds of EUR 7 bn promised to Poland earlier this week to fight off the economic woes of the virus crisis.

The legislation should be ready by the end of the week, the president added. The President said Poland would not avoid a budget deficit this year, contrary to previous government plans of zero deficit in 2020. The current crisis may hit the Polish economy harder than the financial crisis of 2008, the Prime Minister warned.

"Due to the coronavirus epidemic, the economy is bound to be hit very hard, it will be hit at least as hard as a twelve or so years ago, and there are already forecasts showing that this impact will be even stronger," Morawiecki said. For employees, the package will include wage payment for those who cannot work for various reasons, the president said after the Cabinet Council meeting. Businesses will benefit from delayed social insurance payments, which they will also be allowed to pay in instalments.

Poland's state-owned development bank BGK will increase guarantees for companies to 80 percent of loan value while the National Bank of Poland and the Polish Financial Supervision Authority will undertake measures to protect the Polish banking system, President Duda added.

Under certain conditions, the government will help employers cover 40 percent of their wage bill, providing for earnings up to the national average wage level, [Ed: PLN 5,330.48 (EUR 1,187)] Morawiecki said, adding that the employer will have to match the amount.

Meanwhile, those whose earnings were affected among employees on flexible earnings contracts as well as self-employed people would be eligible to receive a benefit of up to 80 percent of Poland's minimum wage, the Prime Minister said. The current minimum wage level is PLN 2,600 (EUR 577), before tax and social insurance contribution. There are thought to be up to 1.5 million people, mostly lower earners on flexible work permits and a further 3.5 million self employed people in Poland.

Companies will also be offered loan guarantees, cash flow support and micro loans of up to PLN 5,000 (EUR 1,110), Morawiecki also announced. The largest measure is the promise to set up an investment fund worth at least PLN 30 bn (EUR 6.66 bn), in addition to EU funds, according to Morawiecki. The money will be used for public investments, including local roads, digitisation, the refit of schools and transition to greener forms of energy.

The package will also boost healthcare investment, the president said. The government will earmark PLN 7.5 bn (EUR 1.67 bn) for healthcare support, the organisation of infectious disease hospitals and medical equipment, Mr Morawiecki added.

The package also includes measures to fight with unreasonable price increases amid the pandemic, the Prime Minister announced. The government also intends to temporarily reinstate Sunday trading, which has been virtually phased out over the past years. Additionally, work permits for foreigners will be extended to help Polish companies fight staff shortages.

The PLN 212 bn package includes a PLN 66 bn (EUR 14.66 bn) cash component, a PLN 74.5 bn (EUR 16.56 bn) government investment fund component as well as PLN 70 bn (EUR 15.56 bn) at the disposal of the central bank for ensuring liquidity for the capital markets.