Poland's general government deficit reached 6.6% of GDP in 2024, marking the highest level since 2020. This increase was driven by elevated spending on defence, social programmes, and infrastructure investments. The deficit surpassed both the government's forecast of 5.7% and the previous year's 5.3% figure. The country's public debt rose to 55.3% of GDP in 2024, up from 49.5% the previous year. This increase was attributed to higher expenditures and slower-than-expected revenue growth. S&P Global affirmed Poland's credit rating at 'A-' with a stable outlook but cautioned that political polarisation is hindering fiscal consolidation efforts. The agency noted that the government's ability to implement spending cuts is constrained by the risk of electoral backlash. The Polish government has pledged to reduce the deficit to the EU's 3% target by 2028. However, the OECD has expressed concerns about the feasibility of this plan, given the current fiscal trajectory and political landscape. Poland's defence spending reached 4.1% of GDP in 2024, the highest among NATO members. The government has requested the EU to exempt such expenditures from fiscal rules, arguing that they are essential for regional security. The country's political environment remains deeply polarised, with significant divisions between liberal and nationalist factions. This polarisation complicates consensus on fiscal reforms and long-term economic planning. The European Commission has indicated that Poland may be subject to the Excessive Deficit Procedure due to its high deficit levels. This would require the government to submit regular reports on measures taken to reduce the deficit. In response to these challenges, the government has outlined a medium-term fiscal plan aiming for gradual consolidation. However, analysts remain sceptical about the plan's effectiveness without significant policy adjustments. The International Monetary Fund has advised Poland to exercise caution regarding further fiscal loosening, highlighting the risks of unsustainable debt growth and the need for compliance with EU fiscal rules. As Poland navigates these fiscal challenges, the interplay between economic policy and political dynamics will be critical in determining the country's financial stability in the coming years....