Poland's Fiscal Council warns of high risk to public debt threshold

The Fiscal Council has issued its first-ever opinion on the 2027 budget draft, warning of a deep and lasting imbalance in public finances. Experts noted that the current deficit is the result of decisions made over several years rather than a collapse in state revenue. While revenue-to-GDP ratios remain historically high, spending growth is significantly outpacing income.

The Council warned that there is a very high risk of the public debt exceeding the 55 percent of GDP threshold by 2027. This threshold is projected to be breached in nearly all analyzed risk scenarios, including those where expected natural savings do not materialize. The current budget draft lacks an adequate safety margin.

While defense spending is a factor, the Council clarified it accounts for only about one-quarter of the increase in expenditures since 2021. Other significant contributors include social transfers, wages, and other permanent state obligations. Furthermore, the Council stated the draft does not sufficiently address ECOFIN recommendations to use the national exit clause to restructure spending or increase revenue to sustainably fund higher defense costs.