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Morawiecki on public investments: “with a vengeance”. The data shows something else

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Prime Minister Mateusz Morawiecki boasted about the achievements of his government at the PiS convention, including the level of public investment. However, the data of the Central Statistical Office show a different reality.

During the first day of the Convention “Programowy Street of Law and Justice”, which took place in Warsaw on May 13 and 14, there was a lot of talk about how much the government of the United Right had done, unlike the previous ones. It was also one of the topics of Mateusz Morawiecki’s speech. The Prime Minister spoke about investments. “We are accused that this investment ratio in relation to GDP is not as expected. And it is true. There is a lot to do here” – he admitted. He continued: “But let’s be honest: what we can do; what the state can do – generate public investment – we have done it with excess, we have done it with excess. If we want to check it, let’s look at the data: how many local investments were made, in roads, water supply, sewage systems, schools, nurseries, kindergartens, hospitals, fire stations, community centres. How much were these investments during the eight years of our predecessors, and how many are these investments now. It’s heaven and earth,” Morawiecki said.

Investment rate: in 2022, the lowest since the 1990s.

The Prime Minister’s sentence: “We are accused that this investment ratio in relation to GDP is not as we assumed” – is a reference to the economic plans of the United Right government from six years ago. In the “Strategy for Responsible Development” from 2017, Morawiecki – then Deputy Prime Minister and Minister of Development – promised: “There will be an increase in the investment rate and an improvement in their quality, with greater use of domestic funds (increase in the investment rate from 20.1% in 2015 to to 22-25 percent in 2020 and maintain it at 25 percent in 2030).”

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The investment rate is, in statistical terms, the ratio of gross fixed capital formation to gross domestic product – in simple terms: it is the part of the country’s income that is invested each year. The Morawiecki government did not achieve the assumed increase in the investment rate.

Dynamics of the investment rate in Poland Central Statistical Office

When the United Right came to power at the end of 2015, the investment rate for that year was 20.4 percent. GDP. In 2016, it fell to 18.5 percent. Since then, it has not exceeded 19 percent. In 2020 (the first year of the pandemic) it was 18.3%, a year later – 16.8%.

In 2021, in terms of the investment rate, Poland was ranked 24th in the European Union. In 2022, according to preliminary data from the Central Statistical Office, the investment rate was 16.7 percent. and it was the worst result since 1995.

Public investment rate: lower than under the PO-PSL government

However, Prime Minister Morawiecki did not provide the above data at the convention. He paid more attention to public investment, claiming that the government had done what it could in this area, “with a vengeance”.

We checked how public investments in Poland developed according to the Central Statistical Office. In the annual reports “Investments and fixed assets in the national economy”, the Central Statistical Office provides data on investment outlays in the national economy, including the public sector. What is the public sector? As explained by the Central Statistical Office, it is: “all entities of the national economy grouping state property (of the State Treasury and state legal persons), ownership of local government units or local government legal persons and ‘mixed ownership’ with a predominance of capital (property) of public sector entities”.

Investment outlays of the public sector in the national economyCentral Statistical Office

In 2015, i.e. in the last year of the PO-PSL government, the value of public sector investment outlays in Poland amounted to PLN 104 billion. Then the United Right took over the government – in the first two years, public sector investments fell, only in 2018 their value increased to PLN 107.7 billion, and then it gradually increased to PLN 119 billion in 2021.

These data would confirm Morawiecki’s thesis about the increase in public investment with “a vengeance”. However, in order to properly measure their level, we should relate them – as in the case of total investments – to the GDP generated in Poland. These statistics are also provided by the Central Statistical Office.

During the PO-PSL government, the public sector investment rate (the share of gross fixed capital formation of the public sector in gross domestic product) was the highest in 2010 and 2011 – 7.4 and 7.9 percent, respectively. In 2015, it amounted to 6.4 percent.

Dynamics of the public sector investment rate Central Statistical Office

In the first year of the United Right’s rule, the public sector investment rate fell to 5.1 percent; in 2017 it was 5.5 percent. In 2018, the rate reached the 2015 level, i.e. 6.4 percent. but then it was down. In 2021, it amounted to 5.8 percent. Thus, under the current government, less than 6 percent. GDP is spent on public sector investment.

Government and local government investment rate: lower than government forecasts, lower than under PO-PSL

The Central Statistical Office also provides information on the government and local government investment rate. This is a narrower category of entities than the public sector, including e.g. various earmarked and extra-budgetary funds (e.g. the COVID-19 Counteracting Fund), government executive agencies, universities, local government transport and water supply companies, municipal road authorities, etc.

Dynamics of the investment rate of the central and local government sector Central Statistical Office

And so: in 2015, the investment rate of the central and local government sector was 4.5 percent. GDP. And then it fell: in 2016 to 3.3 percent. ; in 2017 it was 3.8 percent. In 2018, it rose to 4.7 percent, but has since fallen again to 4.1 percent. in 2021 and up to 4 percent. in 2022.

This is below government forecasts. In the long-term financial plan adopted by the government in 2019, it was forecast that the investment rate of the government and local government sector would amount to 4.8 percent in 2022. In last year’s plan, adopted in April 2022, this indicator was forecast at 4.2 percent.

Main photo source: PAP/Leszek Szymanski

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