General government debt will amount to 54% of GDP in 2024, according to the draft budget for next year adopted today by the Council of Ministers. The draft budget law for 2024 has been prepared using the Stabilising Spending Rule (SRW).
The draft budget law for 2024 assumes: a forecast of state budget revenues of PLN 683.6 billion, a state budget expenditure limit of PLN 848.3 billion, a state budget deficit of no more than PLN 164.8 billion, a public finance sector deficit (according to the EU methodology) of around 4.5 per cent of GDP, government debt (EU definition) of 54 per cent of GDP, reads the Ministry of Finance’s communiqué.
The projected increase in state budget revenues of nearly PLN 89 billion in 2024 consists of: an increase in VAT revenues by about PLN 53 billion, an increase in excise tax revenues by PLN 4.3 billion, an increase in CIT revenues by PLN 5.3 billion, an increase in PIT revenues by PLN 19.2 billion, an increase in non-tax revenues by about PLN 6.5 billion – mainly due to a planned PLN 6 billion payment from the NBP profit in 2024, it was stated in an announcement.
To ensure consistency between the requirements of the EU rules and the Polish rule, a mechanism to correct excessive imbalances in public finances has been introduced in the SRW, replacing the existing correction mechanism included in the SRW. In addition, a ‘defence clause’ has been introduced to reflect the discrepancy between pre-payments for the purchase of military equipment (which are recorded as expenditure in the SRW calculated on a cash basis) and deliveries of equipment (expenditure and impact on the general government result according to the EU methodology at the time of delivery). The clause is neutral for the sector result according to the EU methodology, according to the announcement.
The ministry recalled that between 2020 and 2023, the European Commission (EC) introduced a general exit clause, allowing for the suspension of EU fiscal rules and giving more flexibility to Member States to respond to emerging shocks. As a result, the Polish stabilising expenditure rule (SRW) was also adjusted. A return to standard EU fiscal rules is due in 2024.
The Convergence Programme Update (CIP), adopted in April, assumes that general government debt will be 50.5% of GDP in 2023, 52.4% of GDP in 2024, 53.6% of GDP in 2025, 55.4% of GDP in 2026 (up from 49.1% of GDP last year).
Source: Council of Ministers and ISBnews
