Poland’s long-term financial plan and its impact on GDP growth and deficit reduction

Andrzej Domański. @Domanski_Andrz

On April 30, 2024, the Polish government adopted a new financial plan, the “Multiannual Financial Plan of the State for 2024-2027” (WPFP). This plan, in accordance with the Public Finance Act, sets out the goals of the state’s primary functions and the indicators for their implementation, with a focus on achieving constant growth over the next five years.

The government, buoyed by its new financial plan, anticipates an acceleration of real GDP growth to 3.1% in 2024 (compared to 0.2% the previous year) and 3.7% in 2025. It is optimistic that economic growth in Poland will remain robust, above 3% in the following years, driven by decreasing inflation and investments made as part of the National Recovery Plan.

The deficit of the government and local government institutions (according to the EU ESA2010 methodology) was 5.1% of GDP in 2023, which is an increase of 1.7% points of GDP compared to 2022. The European Commission announced that it will open the excessive deficit procedure against EU countries based on 2023 deficit data and will assess whether the exceedance of the reference value resulted from other significant factors, such as defense spending and measures taken to mitigate the economic and social effects of high energy prices. 

The government, in its unwavering commitment to fiscal responsibility, views the budget deficit exceeding the 3% GDP threshold in Poland as exceptional. It has devised a comprehensive plan to gradually reduce the deficit by an average of 0.5% of GDP in structural terms annually from 2025, ensuring a steady path towards financial stability.

The government will present a consolidation strategy this autumn to prevent the sector’s debt from exceeding 60% of GDP in 2026. 

The reform of economic governance in the European Union has underscored the importance of independent fiscal institutions in the public finance system of all EU countries. 

“The state’s long-term financial plan for 2024-2027 has been adopted. We assume a clear improvement in economic growth dynamics (3.1% in 2024 and 3.7% in 2025) and real wages (6.4% in 2024), present assumptions for the Fiscal Council Act, improve the transparency of financial reporting and update the Stabilizing Expenditure Rule,” posted on X, Polish Minister of Finance Andrzej Domański.

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