Gov't amends 2021 budget law owing to stronger growth, rising inflation
Stronger than expected economic growth that has fuelled both revenue and spending has prompted the Polish government to amend this year’s budget.
A spike in inflation has also led to the government’s economists revising the national spending plan.
According to the amendment, Poland's GDP is to grow by 4.9 percent, up from 4.0 percent expected earlier. The annual average inflation rate is now expected to be more than double the 1.8 percent figure projected in the budget law, and is now expected to hit 4.3 percent, the government's press service CIR reported on Tuesday.
Government revenue is now expected to be PLN 483 billion (EUR 104.5 billion), up from the PLN 404.5 billion (EUR 87.5 billion) expected earlier, while spending will grow to PLN 523.4 billion (EUR 113.2 billion) from PLN 486.8 billion (EUR 105.3 billion).
"Budget receipts are higher by as much as PLN 80 billion (EUR 17.3 billion) compared to what we had assumed for the year," Mateusz Morawiecki, the prime minister, said at an earlier briefing.
Corporate income tax (CIT) and value added tax (VAT) are the main contributors to the increased revenue.
The budget deficit will shrink to PLN 40.4 billion (EUR 8.74 billion) from the originally planned PLN 82.3 billion (EUR 17.8 billion).
The EU and domestic fiscal restraints will be brought back in 2023, when "higher spending related to fighting the consequences of the Covid-19 (pandemic) should be naturally phasing out."
The CIR also said that, in line with IMF and OECD recommendations, the Polish government will not be tightening its fiscal policy too quickly so as not to dampen economic growth.
The improved budget situation has let the government to transfer an additional PLN 12 billion (EUR 2.6 billion) to local government, and invest PLN 10.1 billion (EUR 2.2 billion) more in roads and railways.
Poland's healthcare service will receive an additional PLN 1 billion (EUR 216 million), while the police, the border guard and the fire service can count on PLN 2.2 billion (EUR 476 million) more this year.
Higher education and science will be supported with an extra PLN 1 billion (EUR 216 million) while culture and national heritage protection are to be handed an additional PLN 672 million (EUR 145 million).