Poland's 2027 budget plan faces criticism for high deficit

The Polish government has adopted a draft budget for 2027, outlining a financial plan that Prime Minister Donald Tusk described as "tight but responsible." The budget forecasts total revenues of 695 billion PLN, an increase of approximately 10% from the previous year, with tax revenues expected to reach 622.4 billion PLN. This includes anticipated higher income from corporate tax (CIT) due to a planned rate increase and improved business profitability, as well as value-added tax (VAT).

However, the expenditure side paints a different picture, with total budget spending projected at 977.6 billion PLN. Significant allocations are earmarked for defense, with 198.1 billion PLN (4.51% of GDP) dedicated to national defense. Healthcare also sees a substantial increase, with 274.1 billion PLN allocated, including a record 41.5 billion PLN for the National Health Fund (NFZ). Other key areas of spending include public security (36.5 billion PLN), higher education and science (43.7 billion PLN), and transportation infrastructure (62.4 billion PLN).

Despite the government's emphasis on responsibility, the draft budget projects a substantial deficit of nearly 283 billion PLN. This has drawn sharp criticism from economists, who label the plan as "wildly risky." They warn that the government is balancing on the edge of fiscal safety and express concern over the lack of fiscal consolidation measures. The budget also includes provisions for energy transition, with 8 billion PLN allocated for the construction of the first nuclear power plant and 2.8 billion PLN for the Intervention Stock Fund.

The projected deficit and increased spending, particularly on defense and social programs, raise questions about Poland's long-term fiscal sustainability. While the government aims to boost key sectors, the significant gap between revenue and expenditure could pose challenges in the coming years.