PLN 48.5 billion – that is the size of the state budget deficit after just the first two months of 2026. Government spending is rising rapidly, and in January-February alone, the hole in the public finances was larger than the deficits generated by the Law and Justice (PiS) governments over entire twelve-month periods in individual years.
The latest statement from the Ministry of Finance paints a very troubling picture of the state of public finances under the KO-Left-PSL coalition government.
Budget revenues in the period January–February 2026 amounted to PLN 78.3 billion, while expenditures soared to as much as PLN 126.8 billion. This difference results in a massive PLN 48.5 billion deficit.
To understand the scale of this phenomenon, it is enough to look at historical data. The United Right government recorded a deficit of PLN 10.4 billion for all of 2018, PLN 13.7 billion for all of 2019, and, in 2022 – a year marked by economic shocks following the outbreak of war – only PLN 12.4 billion. Even in 2016, when the extremely costly “500 Plus” program was introduced, the full-year deficit amounted to PLN 46.3 billion. The current government has surpassed those full-year figures in just 60 days.
Rising expenditures, weak signals from the economy
Expenditures of PLN 126.8 billion represent 13.8% of the annual plan, but year-on-year this still represents an increase in state spending of up to PLN 14.7 billion (i.e., 13.2% compared with the first two months of 2025).
Although tax revenues rose slightly (by PLN 2.1 billion to PLN 69.5 billion), the detailed economic data are far from encouraging. Revenue from VAT, the state’s key tax, amounted to PLN 64.5 billion and was only 1.5% (PLN 0.9 billion) higher than a year earlier. As the ministry itself explains, VAT revenues in February were negatively affected by a drop in industrial production (down 1.5% year-on-year) and a deep slump in construction and assembly output (down 12.8% year-on-year in January). The situation was partly supported by payments related to public and military investments made in December 2025.
The situation also looks worse in the case of non-tax revenues from the sale of greenhouse-gas emission allowances – the budget received PLN 1.5 billion from this source, which is 22.9% (PLN 0.4 billion) less than a year earlier. Excise duty revenues, in turn, reached PLN 14.1 billion (an increase of PLN 1.2 billion).
PIT revenues are heavily in the red
Revenue from personal income tax (PIT) is particularly weak. According to the Ministry of Finance report, it was negative, amounting to –PLN 24.7 billion. This is PLN 1.9 billion (8.3%) worse than the result recorded in the first months of the previous year.
The ministry explains this primarily by transferring higher shares to local government units. In accordance with the reform in force since 2025, local governments received double instalments of their revenue shares in January and February, totalling PLN 59.5 billion (compared with PLN 53.5 billion a year earlier). However, even assuming that local government shares had remained at last year’s level, central government PIT revenues would still have been negative, at –PLN 18.6 billion.
Bank tax drives CIT revenues
The only major income tax to show a clear increase is the corporate income tax (CIT). The budget received PLN 11.2 billion from this source, an increase of 11.1% (about PLN 1.1 billion). However, this is largely the result of a direct additional burden on the banking sector from new tax rates, rather than from the higher profitability of Polish companies. As the ministry itself specifies:
“In the case of CIT revenues for February 2026, it should be noted that from 1 January 2026, a higher CIT rate applies, among others, for commercial banks (increased from 19% to 30%). Due to payment deadlines, February is the first month when higher revenues from this source for January 2026 are visible.”
The deficit generated in just the first two months of this year naturally raises questions about how large the budget gap will be by the end of 2026 and whether the state can sustain such rapidly rising expenditures.