“Without expansive policies we would not have saved companies and jobs,” Poland’s Finance Minister Tadeusz Kościński said on Monday, addressing the European Financial Congress in Gdańsk.
A week after revising the 2020 balanced budget he prepared at the beginning of the year to provide for an unprecedented deficit of PLN 110 bn (EUR 26 bn) and announcing a PLN 83 bn (EUR 18.5 bn) deficit for next year, the Polish Finance Minister said that “bold and expansionary fiscal policy, which at the same time has rationally estimated costs” is the best way to fend off what may be “the biggest financial shock for decades.”
Mr Kościński described the Polish government’s response to COVID-19’s attack on the economy as “one of the largest actions in Europe,” and said they were ready for the second phase, which was “to break down the uncertainty about the future of the private sector, companies and households.”
Mr Kościński said that public investment, as prescribed by the IMF, was what was needed. However, he was aware that the effects of public investment on the economy take time to materialise and he therefore believed that now was not the time to cut social spending.
This, according to the Finance Minister, meant that there would be a need for significant borrowing, but that the present government had shown fiscal prudence in the past in budgeting, reducing the deficit, as measured as a percentage of GDP, by eight percent since 2017.
Polish GDP is set to drop by 4.6 percent according to Polish government estimates, a forecast shared with the European Commission, while a bounceback next year is forecast at 4 percent growth. In Kościński’s view, Poland will emerge stronger from the crisis than many of its neighbours, back on track at 2019 levels of output by late 2021. Meanwhile France’s economy had taken a retrograde step of 15 years to make up, Italy may need 25 years and the average in the EU was 10 years.