Poland’s Finance Minister, Andrzej Domanski, revealed to Reuters in an interview during the International Monetary Fund and World Bank spring meetings that the European Union will scrutinise Poland’s defence spending. This figure is the highest in NATO when measured against economic output, underscored by Poland’s strategic position within the alliance.
The EU is advocating for member states to manage excessive deficit levels. Poland has been investing double the NATO requirement of 2% of the gross domestic product (GDP) since 2022 to bolster its deterrence capabilities, as concern that conflicts could potentially extend beyond neighbouring Ukraine rises in the country. A preliminary reading earlier this month indicated that Poland’s 2023 general governance deficit was 5.1% of GDP, with economists predicting it to rise to 5.4% in 2024, according to a Reuters poll.
The European Commission intends to reintroduce the 3% deficit limit, suspended from 2020 to 2023 due to the COVID-19 pandemic and the war in Ukraine. EU member states that exceed this limit must implement a plan to return below it. Domanski emphasised that the increase in defence spending will be a mitigating factor in the excessive deficit procedure.
He told Reuters that Poland spent 4.1% of GDP on defence this year and would increase next year. Domanski added that the new EU economic governance framework, which will be in effect within weeks, will grant countries with relatively lower debt levels more time to reduce higher deficits.
