Ministry of Finance to increase defence spending to 3 percent of GDP

Russia's aggression against Ukraine forced the civilised world, especially the countries of Central and Eastern Europe, to act.

The first field of action is, of course, massive support for Ukraine itself. We should globally speak with one voice supporting Ukraine in a comprehensive manner. The reconstruction process should expeditiously prepare the country, among others, for future EU accession, in line with the “build back better” principle.

The international platform for Ukraine’s reconstruction should be established ensuring much needed coordination between stakeholders and – more importantly – guaranteeing the reform-based conditionality of reconstruction. At the same time, the Ukrainian government should play the central role in the process.

As for Poland’s assistance, we are ready to continue  comprehensive support for Ukraine. Before the war, Polish companies were among the largest external suppliers of Ukraine and, at the same time, important foreign investors. Now they are more than willing to support our neighbor in rebuilding indispensable infrastructure, such as roads, bridges, housing, rail traction or energy grid.

Polish aid to Ukraine amounted to EUR 8,36 billion according to OECD data, which is equivalent to 1.3 percent of our  GDP. What is more, Poland is ranked second in terms of military aid with committed and provided weapons worth EUR 1.8 bn. Public support for Ukrainian refugees is unprecedented and comprehensive. Since the beginning of the war, nearly 9 mln refugees have crossed the border of our country.

Almost 1.5 mln of them registered under temporary protection in Poland. Refugees have free access to healthcare, education, social care and benefits. According to Polish Economic Institute annual cost of this aid is about EUR 3.4 bn. We also support Ukrainian entrepreneurs in Poland hosting many of them and their companies. Polish central bank introduced the programme allowing Ukrainians to convert cash. We have provided nearly 6,000 living places in modular houses covering the living needs. Eventually, this number will grow to 10 000. It is also worth mentioning that 77 percent of Poles have been engaged in aid for Ukraine and their support can be estimated at around EUR 2 bn.

Poland consistently and fully supports the EU’s assistance activities for Ukraine implemented within the framework of EU external policy instruments, including the macro-financial assistance in the form of loans. We support the proposal of the broader, structured financial support instrument for Ukraine for 2023. As war continues, we are convinced that predictable and mid-term EU support is essential for our neighbours.

The second field of action is increasing the military potential. We must abandon the illusion:  the case of Ukraine can happen in respect of any other country in our region. We must be prepared for such a scenario. This requires increased military spending in the coming years. We hope that the EU's fiscal framework will not stand in the way of achieving this goal.

At the end of last year, Poland published an unofficial paper on defence expenditure under the Stability and Growth Pact in favor of greater flexibility of EU rules in relation to this type of expenditure. Poland's approach was appreciated by the countries of our region, like Lithuania and Romania. France and Greece also think in a similar way. The investment gap in the military area, in the context of the war in Ukraine, was recently pointed out by Commissioner Thierry Breton.

Welfare and security are not for free and cannot be regarded as guaranteed forever. They are among others a result of collective actions and public investments. Russia's unprovoked and unlawful aggression against Ukraine has revealed the immediate need to increase military spending. Poland will increase expenditures for this purpose within the budget from 2.2 percent GDP in 2022 to 3 percent GDP in 2023. We believe that the watershed moment requiring a change in the EU security and defence has come and we need to put defence at the top of our priorities.