France, Italy, Belgium, Hungary, Malta and Slovakia for violating budget rules. What does the government say about this? “The excessive deficit procedure (EDP) against 7 member states was launched based on deficit data in 2023. Since in 2023 the deficit in Poland significantly exceeded 3 percent of GDP, the European Commission was obliged to take such a step,” the Ministry of Finance told Next.gazeta.pl.
Poland subject to EU excessive deficit procedure
The general government deficit in 2023 exceeded the 3% GDP threshold and reached 5.1%. What is more, according to the European Commission’s forecast, this year it will be even higher and will amount to 5.4%. The government will have to send the European Commission a plan to reduce the deficit by autumn. Poland will now have four to seven years to take corrective measures. “In 2020-2023, fiscal rules in the EU were suspended due to the pandemic and then the war in Ukraine. From 2024, there was a return to EU rules, according to which the excessive deficit procedure is triggered if the public finance sector deficit (according to ESA) exceeds 3% of GDP,” the Ministry of Finance reminds, explaining that in parallel with work on the draft budget, it will prepare a medium-term budgetary and structural plan.
Ministry of Finance: We are in dialogue with the European Commission
“All member states should submit medium-term budget and structural plans to the EU in the autumn (in line with the reform of economic governance). In these plans, even if the country were not subject to the EDP, a path for reducing the deficit should be presented. In other words, the most important element of the plans will be the paths of expenditure leading to a reduction in the deficit. The pace of consolidation of public finances is currently the subject of a dialogue with the European Commission,” explains the Ministry of Finance. During such a dialogue, various important financial factors that affect the amount of the deficit are discussed, among other things. In the case of Poland, this is about spending on defense, which is to result in a more lenient approach from Brussels towards our country. “The draft recommendation of the EU Council regarding the pace of reducing the excessive deficit will most likely be announced at the end of November 2024. After the assessment of the plans by the European Commission, the EU Council will recommend spending paths to the Member States, which will be binding for at least 4 subsequent budget acts. Poland plans to submit its plan by the deadline agreed with the European Commission, which will ensure consistency between the plan and the draft budget act for 2025,” explains the Ministry of Finance to Next.gazeta.pl.
Minister Domański: There will be no talk of any cuts
On Friday, he was asked about the excessive deficit procedure in the Sejm. – There will be no talk of any cuts, thanks to economic growth, budget revenues are growing. In line with expectations, the European Commission has decided to initiate the excessive deficit procedure. I would like to remind you that it concerns 2023, the last year of PiS rule, when the deficit amounted to 5.1%. We are now in a technical dialogue with the European Commission. In November, we will receive a recommendation from the EC and we will take appropriate steps – the minister said. On what does the head of the Ministry of Finance base his optimism, declaring that there will be no cuts? Andrzej Domański pointed out, among other things, that VAT revenues are growing dynamically. – In June, they increased by 30%, which is why I am optimistic – he said.
Source: Gazeta
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