The Polish economy’s output will fall by about 10 percent or more in the second quarter of 2020, before a surge in the next six months, which will bring GDP to -3.4 percent, the Finance Minister Tadeusz Kościński told PolandIN.
“We will have to be cautious because the health of our citizens is the most important thing,” Mr Kościński said, referring to plans to open up the economy gradually after the full lockdown.
The Finance Minister is delivering new forecasts to the European Commission in its report on convergence on Thursday. The drop in economic growth accompanied by higher government spending will open up an eight percent budget deficit in Poland, months after the unveiling of Poland’s first balanced budget in January.
The borrowing requirement does not include the off-balance sheet borrowing to support companies suffering the effects of lockdown announced in mid April, financed by bonds issued by the Polish Development Fund and the Polish Development Bank. Analysts at IGN Bank Śląski think that the EC may make Poland count these bond issues, estimated at PLN 100 bn [EUR 22 bn] as national debt, bringing their total borrowing above Poland’s constitutionally acceptable levels.
However, the Minister believes Europe will take a kinder eye to indebtedness this year, and quoted the example of the German government, which has raised money in a similar way without the EC making it change its balance sheet.
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