budget

A week after it’s swearing-in, the Donald Tusk’s government presented Sejm with a draft state budget for 2024. It’s a budget with the highest deficit in the history of Poland, even larger than in the assumptions of the PiS government’s draft. According to the European Commission's estimates, Poland in 2023 and 2024 will have one of the highest public finance sector deficits in the European Union.

According to the estimates of independent experts - former longtime employees of the Ministry of Finance, the real budget deficit may amount to over 235 billion PLN. That's 345% of what the government presents.

The true budget deficit at the end of 2023 will amount to over 206 billion PLN. The budget debate taking place in Sejm today is based on the draft budget, which does not show the full picture of state’s expenditures and revenues. Long-term employees of the Ministry of Finance (Sławomir Dudek, Ludwik Kotecki, Hanna Majszczyk) show what the budget’s draft for 2023 should really look like.

In the current situation we do not need creative legal changes, but a plan for building military security, which would not affect the stability of public finances and the development of the national economy. The strategy of irresponsibly increasing state spending and the country's debt may end in very high inflation, further increases in interest rates and destabilization of the economy. This would harm both the defense of the country and the economic situation of citizens.

In response to Russia's invasion of Ukraine, the Law and Justice government began work on creating two new funds in the state-owned Bank Gospodarstwa Krajowego to finance "systemic aid" and additional military spending. At the moment, the debt beyond the control of the parliament amounts to PLN 260 billion. According to the government's plans, by the end of this year it will amount to PLN 350 billion, and by 2025 to over PLN 400 billion, i.e. about a quarter of the public debt calculated according to the EU methodology. The constitutionality of such actions raises serious doubts.

The fast economic growth, in place since 2014 due to the good economic situation in the global economy, leads to an increased state's income.  Combined with the limited growth rate of some expenditures, it gives the government more room for maneuver.

The crucial factor for the safety of public finances is the deficit of the entire public finance sector. The state budget is responsible for less than half of the expenditure. In addition, the public finance sector includes budgets of local governments, the Social Insurance Institution, the Agricultural Social Insurance Institution, the National Health Fund and a number of other entities.

The Ministry of Family, Labor and Social Policy proposes to return to the harmful policy of the PiS government from 2016-2017: the stepwise increases in the minimum wage(14.3% in total). In 2019, the minimum wage would increase from the current PLN 2100 to 2250. This raise (7.1%) would be higher than the forecasted increase in whole-economy wages (5.6%).