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Average inflation seen at 12% in 2023
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GDP growth seen at 0.9% this year, 2.8% next year
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Increased spending to push debt-to-GDP ratio higher
(Updates after government adopted financial plan)
WARSAW, April 25 (Reuters) - The ratio of Polish public
debt to GDP will be 50.5% in 2023 and will rise to 52.4% and
53.6% respectively over the next two years due largely to
increased defence spending, Poland's finance ministry said on
Tuesday.
The ministry said the need to shield households from higher energy prices and support for Ukrainian refugees in Poland would also push up spending. "The main challenge for fiscal policy and at the same time the cause for the increase in debt is the need to finance defence spending," the ministry said, presenting its financial plan for 2023-2026.
"However, Poland's debt in relation to GDP remains relatively low compared to the EU average and is unlikely to increase the risk to the stability of public finances." The government assumes GDP growth of 0.9% in 2023 and 2.8%, 3.2% and 3% respectively in 2024, 2025 and 2026. It predicts that average annual inflation will be 12% this year and will fall to 6.5% in 2024, 3.9% in 2025 and 3.1% in 2026. The public finance sector deficit is expected to amount to 4.7% of GDP in 2023, and in the following years it will fall to 3.4% in 2024 and to 2.9% in 2025 and 2026. The updated plan does not take into account the requirements resulting from the stabilizing expenditure rule (SRW), a limit on public debt established in the Polish constitution. "SRW is an implementation of EU rules, but in its current form it implies a much deeper, abrupt consolidation than the one required by EU rules, which would result in a threat to macroeconomic stability," the ministry said. "For this reason, and taking into account the discussion on new rules in the EU, it will be necessary to adjust the SRW from 2024." (Reporting by Pawel Florkiewicz and Anna Wlodarczak-Semczuk Editing by Christina Fincher)
