Jarosław Gowin in “Rozmowa Piaseckiego” on TVN24 spoke about the condition of the Polish economy. – In 2023, quite severe cuts will be necessary – said the former deputy prime minister. Gowin is also concerned about the scale of the public debt. – Public debt has increased dramatically as a result of objective factors, i.e. a pandemic, the need to help Polish companies – indicated the leader of the Agreement.
Former Deputy Prime Minister and Minister of Development, Labor and Technology, Jarosław Gowin was asked if he predicted a public finance catastrophe, which could not be reversed by the Reconstruction Fund and EU funds. – Not a catastrophe, I know – and this is not fortune-telling, but hard knowledge – that in 2023 quite severe budget cuts will be necessary – said Gowin.
In his opinion, however, “the Family 500 plus program will not be questioned.” “No future government camp will decide to do so,” he said.
The budget 2022 – Gowin on public debt
On the other hand, as the leader of the Agreement noted, “a separate issue is the scale of the public debt”. – Apart from the budget, I am concerned about something that I pointed out many times when I was still a member of the government, i.e. the scale of public debt. This public debt increased dramatically as a result of objective factors, i.e. a pandemic, the need to help Polish companies, which, incidentally, was done well, explained the former deputy prime minister.
Meanwhile – as Gowin added – “unfortunately, there is a whole range of new solutions within the framework of the Polish Order, of an obvious handout nature”. – Just as evidently, the local government investment program is currently financed from public debt. The government decided to hide the debt by transferring these funds, for example, to institutions such as Bank Gospodarstwa Krajowego, but there is no money in Bank Gospodarstwa Krajowego, there is only a bank account – he said. “Someday this debt will have to be repaid,” he added.
Poland’s public debt
Public debt is the sum of debts incurred by central and local government authorities.
The current amount of public debt in Poland depends on the methodology of its calculation. According to the official national methodology, the state public debt at the end of the first quarter of 2021 amounted to PLN 1,152,655.2 million, i.e. PLN 1.152 trillion. This meant an increase by PLN 40,849.1 million (3.7%) compared to the end of 2020. The public debt to GDP ratio calculated using this method is given only on an annual basis and at the end of 2020 amounted to 48%. GDP.
In turn, according to the EU methodology used by Eurostat, public debt at the end of the first quarter of 2021 amounted to PLN 1,389,836.8 million, i.e. PLN 1.389 trillion. This meant an increase by PLN 53,745.7 million (4%) compared to the end of 2020. Poland’s public debt to GDP ratio calculated using this method amounted to 57.6% at the end of 2020. GDP, and at the end of the first quarter of 2021, 59.1 percent. GDP.
The EU method of calculating public debt is similar to the statutory definition, but more comprehensive. It contains an additional adjustment of the statutory public debt to include debts incurred by certain entities of the public finance sector, which were not listed in the Public Finance Act. This act does not cover, inter alia, bonds issued by Bank Gospodarstwa Krajowego or the Polish Development Fund, and thus – these liabilities are not taken into account when calculating the statutory PDP.
In the draft budget act for 2022, which was adopted by the government last week, it was stated that the state public debt next year will amount to 42.6 percent. GDP will fall from 45.1 percent. GDP in 2021 and 47.8 percent. GDP in 2020. The general government debt is to amount to 55.5 percent. GDP.
Main photo source: TVN24