Polish PM vows to strive for deficit below EU cap

Poland’s prime minister on Tuesday said his government would try to keep the deficit below the European Union’s limit of 3 percent of economic output despite a set of spending hikes.

Speaking after a Cabinet meeting in Warsaw on Tuesday, Mateusz Morawiecki said Poland’s general government deficit would increase on the back 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 said, however, that the government would try to keep the deficit in check, “in line with the Maastricht convergence criteria, which means the 3 percent” target, the news agency reported.

Speaking during a rally in the southwest of the country over the weekend, Morawiecki said that Poland’s general government deficit would increase to “2 percent, or maybe even 3 percent” of gross domestic product (GDP) in 2020, according to business daily Puls Biznesu.

Finance Minister Teresa Czerwińska said on Monday she would do her best to make sure the deficit stays within the 3 percent threshold required of European Union members.

Under Poland’s budget for 2019, GDP is expected to grow 3.8 percent, and the target for the general government deficit is 1.7 percent of GDP.

Critics warn of excessive spending

Morawiecki’s remarks on Monday came after a group of economists and finance experts sounded the alarm over a package of spending pledges made by the Polish government.

Eighteen experts, among them former finance ministers and deputy finance ministers, have warned that there is a “very serious risk” that the fresh package of spending hikes will cause Poland’s general government deficit to overshoot 3 percent of GDP next year and “then increase significantly further after 2020,” the Gazeta Wyborcza daily reported on Monday.

The paper quoted an appeal by the experts, most of them outspoken critics of the government, in which they called on Poland’s ruling conservatives to “respect the principles of public finance stabilisation."

The 'Kaczyński Five'

Poland’s ruling Law and Justice (PiS) party last month announced an expansion of its flagship 500+ child benefit programme, in addition to a string of other promises.

Party leader Jarosław Kaczyński said at a convention in Warsaw that his ruling conservatives’ 500+ programme of giving families with two or more children a handout of PLN 500 (USD 133, EUR 116) a month per child would be expanded to include families with just one child.

Kaczyński also announced that the lower personal income tax rate would be cut from 18 to 17 percent and that people under 26 would be exempt from paying personal income tax.

Among the pledges announced during the convention were also additional benefits for pensioners and more bus services to small towns and rural areas.

The party’s new spending promises—a plan dubbed the "Kaczyński Five"—are estimated to cost the government some PLN 40 billion (EUR 9.3 billion, USD 10.5 billion).



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