Prime minister Mateusz Morawiecki, speaking after a cabinet meeting in Warsaw on Tuesday, said that Poland’s general government deficit would increase as a result of new spending pledges. “It is obvious that the budget is not a bottomless pit; it is not rubber,” he conceded, as quoted by Poland’s PAP news agency.
Morawiecki did say, however, that the government would try to keep the deficit “in line with the Maastricht convergence criteria, which means the 3 per cent” target, the news agency reported. For her part, finance minister Teresa Czerwińska said on Monday she would do her best to make sure the deficit stays within the 3 per cent threshold required of European Union members.
Poland’s 2019 budget assumes GDP growth of 3.8 per cent, with a target for the general government deficit of 1.7 per cent of GDP. But last month the ruling Law and Justice (PiS) party announced an expansion of its flagship 500+ child benefit programme, in addition to a number of other promises, including a lower personal income tax rate, additional benefits for pensioners, and improved rural bus services. These promises, dubbed the “Kaczyński Five” are estimated to cost the government some PLN 40 billion (EUR 9.3 billion, USD 10.5 billion).
The prime minister’s remarks came after a group of economists and finance experts, among them former finance ministers and deputy finance ministers, have warned that there is a “very serious risk” that this extra spending will cause Poland’s general government deficit to exceed 3 per cent of GDP next year and “then increase significantly further after 2020,” as reported daily newspaper Gazeta Wyborcza which is generally critical of the government. The experts, most of whom are also outspoken critics of the government, called on the PiS government to “respect the principles of public finance stabilisation.”
Governments govern, and oppositions oppose. It is hardly surprising that in an election year PiS seeks to appeal both to its electorate and to continue to help those it considers have benefitted the least from Poland’s transformation. While there is not much room for manoeuvre, the prime minister is aware of this and keen that the government stays within the 3 per cent limit. This is not the irresponsible action the opposition would have us believe.