Will Poland’s public debt exceed the safe limit? Government document revealed

Data presented a week ago by the Central Statistical Office show that in 2025 the general government deficit amounted to 7.3%. GDP, compared to the initially estimated 7.2 percent, and the deficit of 6.4 percent. GDP in 2024.

The public finance sector debt amounted to 59.7% last year. GDP vs. 54.8 percent GDP in 2024. Meanwhile, the debt limit that is considered safe is 60%. GDP.

Public debt above a safe limit?

It looks like this barrier may be crossed this year. This is indicated by the Ministry of Finance in the project “Report on the implementation of the medium-term budgetary and structural plan for 2025-2028”. “Dziennik Gazeta Prawna” has received the document to be adopted during today’s government meeting.

The Ministry of Finance forecasts that the general government deficit will amount to 6.8 percent this year. GDP, which would mean a reduction of the deficit by 0.5 percentage points. compared to last year. However, as the newspaper notes, the scale of the expected deficit reduction is smaller than would result from the current budget act.

The ministry attributes the slower reduction of the deficit to lower-than-expected tax revenues. – The lower forecast of VAT revenues results primarily from taking into account the effect of the SAFE instrument. In the case of corporate income tax and excise tax, the lower forecast for 2026 is caused by poorer implementation in 2025. Additionally, the lower forecast of excise tax revenues results from the lack – due to the veto of the President of the Republic of Poland – of adopted changes in excise tax rates on alcohol – given in the draft government document.

As mentioned, the project assumes exceeding the safe limit of public finance sector debt. The Ministry of Finance estimates that at the end of this year public debt (calculated according to the EU definition, i.e. including extra-budgetary funds) will amount to 65.1%. GDP. The increase in the debt to GDP ratio in 2026 will be primarily a consequence of the borrowing needs of the budget and funds established at Bank Gospodarstwa Krajowego, primarily the Armed Forces Support Fund, and the nominal GDP growth rate.

If these forecasts are confirmed, it would mean that over the last five years the debt of the general government sector in relation to GDP has increased by over 15 percentage points. percent