Poland sees higher 2024 deficit as govt implements pay rise pledges

By Anna Koper and Karol Badohal

WARSAW (Reuters) – Poland’s revised 2024 budget pencils in a deficit of 184 billion zlotys ($46.44 billion), the government said on Tuesday, higher than previously forecast as the new administration implements policies such as public sector pay rises.

Poland’s new pro-European Union government will hike teachers’ salaries by around a third while also giving state employees a 20% pay increase.

“What was most important to us was to provide money in the 2024 state budget for expenses that meet the obligations towards millions of Poles,” Prime Minister Donald Tusk told a news conference. “In the 2024 budget, we provided funds to increase the average salaries of teachers by 30%, and in the case of beginner teachers – 33%.”

The previous government of the nationalist Law and Justice party had forecast a deficit of 165 billion zlotys.

The budget forecasts gross domestic product growth of 3% and inflation of 6.6%, Finance Minister Andrzej Domanski said.

He said that the general government deficit, the measure used by the European Union which includes local government spending, would be 5.1% of GDP.

“(This) means that we are consistent with the minimum fiscal effort recommended by the European Commission,” Domanski said. “We will strive to gradually reduce this deficit in the coming years.”

Domanski also said that net borrowing needs will amount to 250 billion zlotys in 2024.

“Higher borrowing needs will be financed by debt issuance,” he said. “We see very great interest from foreign investors… so a larger part of the debt than in previous years may go to foreign investors.”

Domanski said that an audit would be carried out in ministries to look for savings.

Asked about plans to put Central Bank Governor Adam Glapinski before a state tribunal, Tusk said if such a decision were made it would not be due to monetary policy decisions but actions that undermined the bank’s independence.

(This story has been corrected to change ‘euros’ to ‘zlotys’ in paragraph 4)

($1 = 3.9625 zlotys)

(Reporting by Anna Koper, Karol Badohal, Pawel Florkiewicz; Writing by Alan Charlish; Editing by Christina Fincher)