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National Reconstruction Plan – Poland. Paweł Borys, president of the Polish Development Fund, on the impact on Poland’s GDP

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Poland is still waiting for the approval of the National Reconstruction Plans (KPO). – I can not imagine a situation in which we would not receive these funds – Paweł Borys, president of the board of the Polish Development Fund said on TVN24. As he admitted, he was counting on an agreement between the government and the European Commission as soon as possible.

The Reconstruction Fund is a means of reviving the EU economy after the COVID-19 pandemic, and at the same time responding to the greatest challenges of our time: the climate and digital transformation. To receive support, Member States must present their recovery plans to the European Commission. The Polish National Reconstruction Plan was delivered to Brussels in early May 2021. Our country is still waiting for the green light from the European Commission. And Brussels has tough conditions, incl. for the repair of courts.

The Polish Development Fund is to be the operator of the National Housing Plan. – So our role is more accounting, it is the government that decides what these funds will be spent on – explained Paweł Borys, president of PFR.


Poland – National Reconstruction Plan

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The “One for One” guest on TVN24 was asked if we needed money from the Reconstruction Fund. – As for the next two years, it is indeed important that investments become the driving force of the economy. They are already growing by 11 percent, but in the corporate sector. We are losing ground when it comes to public investments, so mobilizing funds from the Reconstruction Fund would certainly be positive for the economic situation, especially in the next two years – commented the president of PFR.

Asked whether the lack of money from the Reconstruction Fund will translate into indicators of Poland’s gross domestic product (GDP). – Not this year. This year, the government launched a strategic investment program from Bank Gospodarstwa Krajowego and it will accelerate public investment. However, in the perspective of the next year and the following, of course, these funds would contribute to the fact that the economic situation will be better and we will have more funds for investments – explained Borys.

– I am convinced that it is in the interest of both parties – both Poland and the European Union – that there is an agreement as regards the KPO. We have very favorable conditions and he agrees that these funds would be used to finance more investments, thus we would have a chance to have higher economic growth in the next two years – pointed out the president of PFR.

Each country will receive the first tranche only after the European Commission approves the national spending plan, which must meet the criteria set out in EU law. For the implementation of the National Reconstruction Plan, Poland is to receive EUR 58.1 billion, or approximately PLN 264 billion, to be spent over five years (EUR 23.9 billion in the form of subsidies and EUR 34.2 billion in the form of loans).

For now, it is not known when the money will go to Poland. – As far as I know, the current state of affairs is such that the National Reconstruction Plan is fully agreed with the European Commission, but there is a discussion related to the reform of justice. Here I don’t know what the status is – said Boris. As he emphasized, he cannot imagine a situation in which Poland would not receive these funds. – I hope that this agreement will be reached as soon as possible, but for this we need two parties – he added.

The COVID-19 pandemic and the economy

Paweł Borys was asked how long we will pay off the debts that we have incurred as a country in the fight against the COVID-19 pandemic. – We will pay them back in the next 3-4 years. Before the pandemic, debt fell from 50 percent to 45 percent of GDP. For several years we had almost a budget surplus or a minimal deficit. During the pandemic, we increased this debt by about 8 percentage points of GDP. This is about 200 billion that was spent on countering the effects of the pandemic, he pointed out.

– Now we have a very good budget and public finance situation again. The deficit for last year is probably around 2 percent, so with strong economic growth, debt to GDP should drop in a moment – added the president of PFR.

Borys predicts that by 2024 “debt to GDP will fall below 50 percent again”. – We must be aware that the shields were, however, some kind of investment. It is definitely better to spend this money on job protection than to pay unemployment benefits. People who work pay contributions, pay taxes, and companies do the same. It was a kind of investment that has already partially paid off in 2021 – he emphasized.

However, part of the money to fight the pandemic has not been included in the budget. Earlier, she indicated “unprecedented mechanisms for pushing spending out of the budget” Supreme Audit Office in the analysis of the implementation of the state budget for 2020. – Most of the funds were allocated from the Polish Development Fund – 75 billion to help entrepreneurs to protect jobs and over 100 billion from Bank Gospodarstwa Krajowego under the covid fund. Both in the Polish Development Fund and Bank Gospodarstwa Krajowego, we issue bonds guaranteed by the State Treasury, this is the same public finance debt as the budget debt – said Paweł Borys. He also assured that “the total debt of the public finance sector is below 55 percent (GDP – ed.)”.

Main photo source: Shutterstock

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