Poland’s public debt is expected to increase by 433 billion (€95 billion) over the first two years of the pandemic, reaching 1.5 trillion zloty (€329 billion) by the end of 2021. That is an increase of 41.4% compared to 2019.
According to a report by the finance ministry, public debt rose by 290 billion zloty in 2020 and is forecast to grow a further 143 billion zloty this year.
Poland’s total debt at the end of 2021 will reach 1.5 trillion zloty, or 39,000 zloty (€8,560) per capita. The increase over the two years of the pandemic amounts to roughly 11,000 zloty (€2,420) per person, reports Money.pl.
*forecast
While Poland’s public debt had been steadily climbing in past years, the recent acceleration caused by the pandemic raised it to 57.5% of GDP in 2020.
Poland now has the 12th lowest debt as a share of GDP in the EU, where the average in the eurozone has reached 98% of GDP and 90.7% across the whole bloc.
Next year, Poland’s debt is expected to hit 59.99% of GDP, just clearing the EU’s limit of 60% of GDP, which has already been exceeded by 14 other member states in 2020, such as Greece (205% of GDP), Italy (155%) and Portugal (133%).
Dług sektora finansów publicznych przyrósł w 20' o 290 mld zł, co stanowi 12,5% PKB z 20'. To 4-ta najwyższa relacja przyrostu w UE.
Jeżeli chodzi o relację długu do PKB (57,5%) to mamy 12 najniższą w UE. Spadliśmy o 1 oczko.
Spośród krajów bez EUR mamy jeden z wyższych długów. pic.twitter.com/SYKvaazPdC
— Sławomir Dudek (@DudSlaw) April 25, 2021
Of the 290 billion zloty increase in Poland’s debt in 2020, an estimated 65 billion zloty was spent on economic aid packages by the Polish Development Fund (PFR) as well as a further 100 billion zloty on the COVID-19 counteracting fund (Fundusz Przeciwdziałania COVID-19).
Some of the increase also came from increased social spending in the form of child benefits, additional pension payments as well as a lowering of retirement age. These “political promises” were not matched by new “permanent income” sources, according to the Civic Development Forum (FOR), a Warsaw-based liberal think tank.
However, before the pandemic struck, the government had announced the first deficit-free state budget in Poland’s post-1989 history.
In the end, last year’s budget deficit – the difference between public income and expenditure – reached 161.5 billion zloty, or 7% of GDP. This year, the deficit is forecast to reach 170 billion zloty, also 7% of GDP, according to the finance ministry.
Poland’s deficit in 2020 was slightly higher than the EU average and higher than 14 countries, of which some managed to record a budget surplus, as in the case of Denmark (1.1% of GDP) and Sweden (3.1% of GDP).
Poland’s government has been seeking ways to increase revenue. This year it has already rolled out a power capacity fee worth 4 billion zloty annually, a sugar tax worth 3 billion zloty, and a trade tax worth 1.4 billion zloty.
The government recently postponed the announcement of its New Deal (Nowy Ład) economic package, which is expected to include a tax hike for the wealthy.
Main image credit: BeatriceBB/Pixabay (under Pixabay License)
Maria Wilczek is deputy editor of Notes from Poland. She is a regular writer for The Times, The Economist and Al Jazeera English, and has also featured in Foreign Policy, Politico Europe, The Spectator and Gazeta Wyborcza.
