Poland Faces a Truly Severe Deficit

A deficit of 282 billion zlotys is the feature of Poland’s draft 2027 budget that most concerns economist Piotr Arak. “Everything else the market can more or less forecast,” Arak, VeloBank’s chief economist, said in an interview with Marcin Piasecki.

The proposed shortfall would equal 7.2% of Poland’s gross domestic product. Arak described it as a record high and said the country would face a deficit of around 7% of GDP for the fifth year in a row.

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Everything else the market can more or less forecast.

That pattern, he argued, points to a continuing rise in public debt. The nominal cost of servicing that debt is also increasing, both in absolute terms and as a share of GDP.

Arak said the draft budget offers no visible route toward lower borrowing or declining debt-servicing costs. “So the level of debt keeps rising, and the costs of servicing the debt also rise nominally and relative to GDP,” he said. “And there is no path for it to fall.”

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So the level of debt keeps rising, and the costs of servicing the debt also rise nominally and relative to GDP. And there is no path for it to fall.