Poland should be heading towards 45% in the public debt-to-GDP ratio in the medium term, which will be a challenge due to, for example, increased defense spending; therefore, it is important to maintain a high rate of economic growth, according to Polish Development Fund (PFR) CEO Pawel Borys.
“Poland was forced to increase its fiscal spending during the pandemic, energy crisis. Shields cost more than PLN 200 billion, which caused the public debt-to-GDP ratio to rise from 45% to 53%. In contrast, in the last 2 years, thanks to rapid economic growth and also a reduction in the fiscal deficit, this debt has already fallen below 50%, to nearly 49%. This is good information that supports our ratings and currency,” Borys said.
The Central Statistical Office (GUS) published preliminary data yesterday, according to which the debt of the general government sector (so-called general government) amounted to 49.1% of GDP at the end of 2022 (compared to 53.6% of GDP a year earlier – after revision).
“I believe that the public debt-to-GDP ratio should still be on a downward trend. We should be heading somewhere towards that 45%. Of course, this is quite a challenge in the medium term, as Poland has decided to increase spending on defense, for example, from 2.5% to 4% of GDP. So a lot will depend on whether we can maintain a high rate of economic growth,” Borys added.
Last September. The Council of Ministers adopted the “Strategy for Public Finance Sector Debt Management in 2023-2026,” which, among other things, envisages a decline in general government debt to 51.7% of GDP in 2022 (from 53.8% of GDP at the end of 2021), followed by an increase to 53.3% of GDP in 2023 and 55% of GDP in 2024, stabilizing below 56% in 2026.
Source: ISBnews
Photo: pfrsa.pl
