FinMin forecasts high deficit, low GDP decline, unemployment growth

Wojciech Olkuśnik/PAP

Poland will have a relatively high budget deficit but also one of the lowest GDP declines and unemployment hikes in Europe, Finance Minister Tadeusz Koscinski has said in a commentary sent to PAP.

The finance minister also pointed out that the state aid granted by Poland due to the coronavirus pandemic was on a par with that of wealthier western countries, "because we did not want to leave anyone without aid."

Koscinski went on to say that the macroeconomic forecasts presented by his ministry were much more conservative than the market consensus, explaining that the role of the Finance Ministry is to "assume greater risk in its forecasts." He added that the largest ratings agencies had forecast Poland's deficit at less than 10 percent of GDP.

He also pointed out that tax data were much better than a few months ago. "Tax revenues, despite the worst economic slump in a hundred years, are almost at the same level as a year ago," he said.

Koscinksi argued that discussions over Poland's deficit are divorced from the economic realities of granting sizeable aid to offset the economic fallout of the COVID-19 epidemic.

"The extra money spent brings tangible results," he said, adding that according to the International Monetary Fund, Poland's fiscal package, measured as a proportion of GDP, was the highest among the developing countries of Europe and worldwide was exceeded only by Chile, Brazil and Thailand.

Koscinksi said that protecting jobs costs money and that it was beyond the means of employers themselves. He said Poland had spent that money to save jobs and as a result the unemployment rate is several times lower than in Western Europe.