EU pandemic fund could boost Poland's GDP by 0.6 pp says FinMin

Polish GDP could grow by 0.6 percent this year, if Poland receives the EUR 35 billion in EU funding it is currently locked out of, the finance minister has said.

The European Commission (EC) has denied Poland access to funding over concerns with the rule of law.

But the Polish government is hoping that by agreeing to make changes to its judicial system in order to meet rule-of-law requirements set out by the EC, it will get access to EU grants and cheap loans under the country's National Recovery Plan (KPO), similarly to most other EU member states which are already spending the money.

"The KPO money is important because it is earmarked for the transformation of power generation, digitisation, infrastructure development and will support growth during an economic downturn," Magdalena Rzeczkowska wrote on Twitter on Tuesday, adding there was a "chance of 0.6 pp in GDP growth in 2023."

In an interview with the Polish public radio earlier in the day, Rzeczkowska said that KPO meant "one percent added to GDP over the coming years."

She also said that the EU money could help strengthen the Polish currency, which would translate in cheaper imports of energy commodities and reduce the cost of servicing Polish debt.

The finance minister went on to say that EU loans were cheaper compared to national loans as financial markets regard the bloc as more reliable than single member states and added that if Poland decided to borrow money in euros, the yield range would be around 4 or even 5 percent.

Solidary Poland, a small ally in Poland's United Right coalition, is opposed to any concessions towards the EU and is thus blocking any reforms that could release the funding.