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Poland's 2024 budget to see big spending on defence, social benefits
Published Aug 24, 2023 08:09AM ET
© Reuters. FILE PHOTO: A general view of Warsaw city is seen from the Palace of Culture and Science in Warsaw, Poland January 8, 2018. REUTERS/Kacper Pempel/File Photo
WARSAW (Reuters) - Poland plans to raise spending on defence, health, social benefits and public sector pay in 2024, the prime minister said on Thursday, after the government approved the budget for next year with an eye on elections scheduled for Oct. 15.
Poland's ruling nationalist Law and Justice (PiS) party, which has already won two elections in part thanks to generous social benefit programmes, has put security at the core of its campaign this year amid fears of rising instability on the country's eastern border with Belarus.
However, some economists warn that big-spending policies announced ahead of the elections could hamper the county's fight against inflation, which was 10.8% in July, and raise the deficit to dangerous levels.
"Under our government, budget revenues have more than doubled," Mateusz Morawiecki told a news conference. "This would not have been possible without programmes to fix the public finances."
The government will spend over 4% of gross domestic product (GDP) on defence in 2024, Morawiecki said. It will spend 137 billion zlotys ($33.23 billion) on raises for public-sector workers and on social programmes like the 800+ child benefit scheme and additional payments to pesnsioners.
It will also spend over 190 billion zlotys on health.
The budget deficit will be around 4.5% of gross domestic product (GDP), compared to the 3.4% forecast in April when Poland submitted its convergence plan to the European Union.
"It should not be a huge surprise given that in the last months... there were lots of promises regarding future spending and fiscal expansion so the direction of travel was to be anticipated, but still it is quite a high fiscal deficit," said Piotr Bielski, head of economic analysis at Santander (BME:SAN) Bank Polska.
"We have to remember that in 2024 the European Union restores the fiscal rules, so a deficit above 3% of GDP will be clearly above the limits that will be set in the European Union's fiscal criteria."
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