EU funds will help avert economic downturn says FinMin

The recently-approved EU post-pandemic funding of the Polish economy will help improve deteriorating economic sentiment, the finance minister has told PAP.

The European Commission has officially confirmed the EU executive's long-awaited approval of Poland's National Recovery Plan (KPO), which will enable conditional release of billions of euros in grants and loans to the country. The approval came in the wake of Poland's concessions in a rule-of-law dispute, including the liquidation of a contested disciplinary panel for judges at the Supreme Court.

"The KPO, to a certain extent, will prevent a looming economic downturn," Magdalena Rzeczkowska told PAP on Monday.

"We estimate that with the start of spending of KPO money in the fourth quarter of this year, GDP growth may increase by 0.1 percentage points in 2022 and by about 0.6 percentage points next year," she said.

"In the following years, the KPO money may boost GDP growth by up to 1 percentage point," she added.

According to her, the EU funds will also raise the level of investment in the economy by 0.4 percentage points in 2022 and 2 percentage points in the following years.

However, the inflow of new cash may also boost Poland's record-high inflation, by some 0.4 percentage points in 2023, Rzeczkowska warned.

The prices of consumer goods and services increased by 13.9 percent in May, a level last seen in 1998, despite a series of rate hikes by the central bank, with the current reference interest rate now at 5.25 percent.

Originally designed for 2021-27, the KPO is worth EUR 35.4 billion, including EUR 23.9 billion in grants and EUR 11.5 billion in loans.