Draft budget act submitted to the Social Dialogue Council

The draft budget act for 2025 adopted by the government on Wednesday was submitted for consultation to the Social Dialogue Council, the Ministry of Finance announced on its website.

“The government side, no later than 30 days before presenting the draft budget act to the Sejm, shall submit the draft budget act for the following year, together with a justification, to the Council in order for the employees' and employers' sides to take a position,” the Ministry of Finance stated in a press release.

Next year's draft budget assumes, among others, a 7% wage increase, a 5% pay rise for the public sector, 3.9% economic growth and 5% inflation. Defense spending is expected to reach 4.7 percent of the forecast GDP.

As indicated by the Ministry of Finance, the draft budget for 2025 has secured a record amount of PLN 124.3 billion for national defense, including an increase in the salaries of professional soldiers. Compared to 2024, this is an increase of PLN 6.2 billion. Together with the expenditure of the Armed Forces Support Fund, next year's expenditure on national defense will reach PLN 186.6 billion, which is PLN 28.6 billion more than planned for this year. This means that in 2025, expenditure on Polish army will amount to 4.7 percent of GDP; this year it is 4.2 percent of GDP.

The bill adopted by the government assumes that the increase in salaries next year will amount to 7 percent. The base amount for teachers' salaries, for employees of the state budget sphere, including officers and soldiers, employees of ministries and central and provincial offices, will increase by 5 percent. The employee remuneration fund will also be increased Social Insurance Institution and KRUS.

PLN 24.2 billion has been allocated for the indexation of pension and disability benefits from 1 March 2025, including for officers and the remuneration of retired judges and prosecutors.

The Ministry of Finance also planned PLN 221.7 billion for health care (including National Health Fund), which means an increase in expenditure by almost PLN 31 billion. In turn, PLN 8.4 billion will go to the “Active Parent” program, PLN 62.8 billion to the “Family 800+” program, and PLN 3.2 billion to the widow's pension. On the 13th and 14th retirement PLN 31.5 billion will be allocated, and PLN 24.2 billion will go to the indexation of pension and disability benefits.

The government intends to allocate approximately PLN 4.2 billion for housing-related purposes. According to information from the Ministry of Finance, PLN 4.6 billion has been reserved for the needs of the investment process of the nuclear power plant for next year. This money is to be used to recapitalize the company Polskie Elektrownie Jądrowe. In turn, for the needs of compensation related to the possible freezing of energy prices PLN 2 billion has been reserved in 2025.

The Ministry of Finance forecasts that the general government sector deficit (government and local government institutions) will amount to 5.5 percent of GDP in 2025. The expected debt-to-GDP ratio of this sector (according to the EU definition) will amount to 54.6 percent at the end of 2024 and 59.8 percent at the end of 2025, which is below the reference value set in the Treaty on the Functioning of the EU at 60 percent. The ratio of the state government debt to GDP public debt to GDP will amount to 43.3% in 2024 and 47.9% in 2025, remaining safely below the prudential threshold of 55% specified in the Public Finance Act.

According to the project, the planned budget revenues will amount to PLN 632.6 billion, and expenditures to PLN 921.6 billion, which means a deficit of PLN 289 billion. As reported Ministry of Financethe state budget deficit in 2025 will amount to 7.3% of GDP, but in conditions comparable to the Budget Act for 2024, the deficit would amount to PLN 180.8 billion, or 4.6% of GDP.

As explained by Finance Minister Andrzej Domański, this amount includes repayments of liabilities of the Polish Development Fund (PFR) for PLN 34.7 billion and the COVID-19 countermeasures fund for PLN 28.5 billion. The cost of debt servicing is to amount to PLN 75 billion, and net borrowing needs to almost PLN 367 billion.

In the statement after the government meeting, it was written that the factors stimulating economic growth will include investments under the National Recovery and Resilience Plan. In 2025, the dynamics of private consumption will reach 4.3%. Total investments will increase by 6.4% – it was reported.

The Ministry of Finance forecasts inflation next year at 5 percent. Minister Domański assessed that inflation will temporarily increase next year, but then it will steadily decline in 2026 and 2027. This year's inflation is to be lower than 4 percent.