The draft of the 2020 Polish gov’t budget foresees a deficit of PLN 83.2 bn (EUR 18.1) as the economy bounces back with 4.0 percent growth, after the slump caused by COVID 19.
The budget is “the next step in the return to the path of growth after global lockdown” Finance Minister Tadeusz Kościński termed the plan which foresees Poland’s largest ever deficit.
The Finance Minister said that the budget, which foresees a rebound of 4.0 percent growth in the economy, after a projected slump of 3.8 percent in gross domestic product this year “has the funds necessary for boosting the investment in the economy and for social programmes which will alleviate the negative effects of the pandemic.
The anticipated increase in expenditure will see the deficit rise to around 6 percent of Polish GDP, according to EU rules, which will mean an increase in public debt to 64.7 percent of GDP, again, according to EU rules.
The Polish constitution limits indebtedness to 60 percent of GDP. However, some of the spending has been “off-balance sheet,” such as through operations by the National Bank of Poland and the Polish Development Fund, which are accounted for differently. ”Under Polish regulations we see public debt around 50 percent this year and 52.7 percent next year.” Premier Morawiecki said on Monday.
Health spending up
The budget also foresees health spending rising to 5.3 percent of GDP, scaling closer to the OECD average of 6.8 percent. Defence spending is to remain high at 2.2 percent of GDP, which exceeds the NATO requirements of 2.0 percent GDP. Pensions meanwhile are to rise by 3.84 percent, and so above inflation.