Poland faces fiscal strain amid deep political divisions

Mace | 28th May 2025 | Brussels, International

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Poland’s public deficit hit 6.6% of GDP in 2024, driven by defence and social spending. Rising debt, polarised politics, and stalled reforms have raised concerns among ratings agencies and EU institutions. With a 3% target set for 2028, analysts question whether fiscal consolidation is possible without broad political consensus.

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 landscap...

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