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Fitch on Poland’s deficit. “We see the risk”

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There is a risk that with the return of the European Union’s fiscal rules, Poland may be subject to the excessive deficit procedure, said Małgorzata Krzywicka, an analyst at Fitch rating agency, during Credit Outlook Warsaw 2024.

– The consolidation path will be moderate, and with the return of EU fiscal rules, we see the risk of Poland being subject to the excessive deficit procedure – said Krzywicka. She added that it is not yet known how the new EU rules will be implemented and how restrictive they will be, but there will be more clarity on this matter in April.

Fitch analyst on the Polish deficit

– (More clarity) will be provided both by the Polish government regarding their medium-term fiscal plans and by the European Commission and its method of estimating the debt – explained the analyst.

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In her opinion, what needs to be clarified, among other things, is the scope for excluding certain expenses from debt calculation.

At the council of EU finance ministers in December (Ecofin), it was agreed that the increase in investments in armaments will be treated as an important factor when considering the launch of the excessive deficit procedure, but there are no regulations on this matter yet – a source close to EU institutions explained to PAP Biznes.

– I bet that this will not be enough to push the deficit below 3 percent and that we will not avoid EDP – noted the PAP Biznes interlocutor.

The EU’s excessive deficit procedure (EDP) is triggered at the request of the European Commission if the deficit in a given member state exceeds 3%. GDP or the debt is higher than 60%. GDP.

The 2024 budget adopted in January assumes a state budget the public debt at the level of 42.5 percent GDP and debt of the general government sector according to the EU definition at the level of 54.2%. GDP. The public finance sector deficit (according to EU methodology) is expected to reach 5.1%. GDP.

Read also: Huge hole in the budget. “Nominally highest ever”

Main photo source: Shutterstock

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