Poland wants to have the largest army in Europe. But we can’t afford it

Poland plans to significantly increase its defense spending, which is to make the country a leader in this field among NATO countries. This year, the defense budget will amount to 4.1 percent of GDP, but the government is already planning to increase it further.

The leaders of the ruling coalition have agreed on a draft budget for next year, which assumes an increase in these expenditures to 4.7% of GDP, which means allocating an amount of PLN 190 billion for defense.

Poland significantly increases defense spending

Such a significant increase in military spending is a huge change, especially considering that until recently Poland, like other countries in the region, had difficulty achieving spending at the level of 2 percent of GDP.

Currently, only five NATO member states spend more than 3 percent of GDP on defense: Poland, Estonia, the United States, Latvia, and Greece. Most alliance countries struggle to meet the minimum spending requirement of 2 percent.

Where to get money for such investments?

Such high expenditure raises questions about sources of financing. The government is struggling with a budget gap estimated at PLN 200 billion, which forces it to consider savings in other areas.

For example, the withdrawal of credit holidays and reduction of subsidies for energy bills are being considered. The Minister of Finance is also sceptical about the proposal of a radical reduction in health insurance contributions, which could also affect public finances.

Already in 2023, Poland significantly increased its military spending, allocating over PLN 96 billion from the budget and additional funds from the Armed Forces Support Fund, which together amounted to 3% of GDP. The previous government, motivated by the conflict in Ukraine, undertook intensive arms purchases, acquiring weapons mainly from the US, South Korea and Great Britain.

Shopping on credit

A significant part of the arms purchases were financed with loans, which was criticized because servicing these debts turned out to be more expensive than commercial loans. Poland took out loans from the United States under the Foreign Military Financing (FMF) program for the amount of 4 billion dollars (over 15 billion złoty) and from South Korea, which granted a loan worth over 100 billion złoty for the purchase of arms.

While modernizing the army is a necessity, many point to the need to better manage spending and spread purchases over time to avoid excessive government debt.

5 percent of GDP for defense

Despite hopes for a change in purchasing policy after the elections, the new ruling coalition is continuing the actions of its predecessors, implementing arms purchases on a similar scale. Foreign Minister Radosław Sikorski announced that defense spending could increase to 5 percent of GDP next year.