Poland's FinMin believes fiscal consolidation measures may help prevent debt from exceeding 55 pct of GDP limit
Measures aimed at fiscal consolidation may help prevent debt from exceeding the 55 percent of GDP limit, Poland's Finance and Economy Minister Andrzej Domanski told TOK FM radio.
"The 55 percent limit is actually a limit that we must take into account – it is a statutory limit (...) We are pursuing a fiscal policy, a budgetary policy, in such a way as to reach this 55 percent threshold – if at all, of course – as late as possible," Domanski said.
"Why am I saying >? Because, as I indicated on Tuesday, we outlined one of the scenarios in the strategy [for public finance sector debt management - PAP ed.]. This scenario is based on the assumption that no additional measures will be taken by the government," he added.
In Tuesday's commentary for PAP Biznes, Andrzej Domanski announced that the government would take additional measures to reduce the deficit.
"In the strategy, we presented a scenario assuming no additional consolidation measures. However, the government will take additional measures to reduce the deficit, which will result in a lower debt path than assumed in the strategy," Domanski told PAP Biznes.
In Wednesday's interview with TOK FM, the Minister of Finance and Economy also referred to the recent decisions of the rating agencies Fitch and Moody's. In September, both agencies decided to downgrade Poland's rating outlook from stable to negative.
"Theoretically, a lower rating outlook should translate into higher yields, i.e. a fall in treasury bond prices (...) However, following these decisions by the rating agencies, which I am obviously not happy about, it is no secret that Polish bond prices have not changed. In my opinion, this shows that investors recognise the strength of the Polish economy," Domanski pointed out.
On Tuesday, the Ministry of Finance published the Public Finance Sector Debt Management Strategy for 2026-2029, the draft of which was adopted by the Council of Ministers last week.
The document indicates that the projected ratio of general government debt (as defined by the EU) to GDP will be 59.8 percent in 2025 and 65.4 percent in 2026, which means that the EDP debt-to-GDP ratio reference value of 60 percent will be exceeded in 2026. Over the horizon of the strategy, this ratio will increase to 75.3 percent in 2029.
In turn, the ratio of government debt to GDP will be 48.9 percent in 2025 and 53.0 percent in 2026, and will then increase, exceeding 55 percent in 2027 and reaching 59.5 percent over the forecast horizon. Over the strategy horizon, the ratio of public debt to GDP will remain below the constitutional threshold of 60 percent.
pat/ ao/