Poland will target a fiscal gap at or below the 3% of GDP mark in the mid-term, but can allow itself some leeway near-term, even above the EU marker of 3%, Poland’s newly appointed deputy PM and Minister of Development, Mateusz Morawiecki, told PAP in an interview.
“The question right now is whether the public finance sector deficit will be 2.8% or 3.2% of GDP,” Morawiecki told PAP. “That’s not a dramatic difference. The deficit will remain on a safe level.”
2016 could bring spending to meet election vows up to PLN 30 bln, possibly much lower, offset in large part by new taxes and improved collection, he assures.
“It’s entirely realistic to make this work,” Morawiecki said. His math has an “absolute limit” on new spending at PLN 25 to 30 bln, and new taxes and tax gap closures “very close to achieving PLN 20 bln in additional budget receipts.”
While Morawiecki talks of a 3% fiscal gap more as a target than a cap, Poland’s new economic policy chief does suggest that further anti-cyclical deficit reduction during economic upturns could build a buffer for any downturn.
“In the mid-term, we will seek to hold it in check, that is around 3%, or even below that level,” Morawiecki said. “The most important thing is for the deficit to work anti-cyclically . . . to have a buffer built up for even faster investments” to stabilize growth during a slowdown.
“In periods of high economic growth we should, in turn, reduce the deficit to use private investments as a motor of economic growth,” the newly appointed Minister of Development told PAP. “Taken together this should result in working out sounder mechanisms of economic growth.”
Morawiecki was named deputy Prime Minister and head of a new Ministry of Development, the home base for economic policy that will coordinate efforts at the Finance Ministry, the Energy Ministry, the Treasury Ministry and elsewhere.
Poland escaped the EU’s excessive deficit procedure in June 2015 despite an end-2014 deficit to GDP ratio at 3.2%, an infraction vis-a-vis the 3% cap due to pension reform costs. The European Commission said at the time it expected the deficit to fall to 2.7% in 2015.
jba/ seb/ gty/ ami