Poland enjoys record-high financial credibility - dep FinMin

PAP was also interested in the VAT gap and whether the pace of its reduction has not slowed down recently. Kalbar/TFN

Poland has been reducing its public debt, which will go down to 46.5 percent of GDP at the end of 2020, and the country enjoys record-high credibility on financial markets amid record-low Treasury bond yields, Deputy Finance Minister Leszek Skiba has told PAP.

In an interview with PAP, Skiba said that at the end of 2020 Poland's debt is set to decrease by 7.7 percentage points from 2016 and by 0.5 pps from 2019. "Its amount in relation to GDP will decline for yet another (fourth) time in 2020," he added.

Asked whether Poland is likely to face an economic downturn, Skiba said that the lower debt will protect the Polish economy if things get rough. In this context he mentioned the Global Competitiveness Index, which names Poland as one of the most stable EU member states in macroeconomic terms.

"It's research by the European Commission which has virtually no objections towards Poland. The starting point for this ranking was how individual member states have been reducing their debt," Skiba said.

Asked whether international financial markets share the same opinion of Poland, Skiba said that "for the financial markets we are as credible as never before and our Treasury bond yields are exceptionally low, and in some cases they even offer negative yields."

"Therefore one might say that the improvement of Polish public finance has definitely been noted by financial markets too," Skiba said, adding that the no-deficit budget that Poland plans to achieve this year is yet another positive signal the country sends to financial markets.

PAP was also interested in the VAT gap and whether the pace of its reduction has not slowed down recently.

"In this respect we are an example for the whole European Union. Our successes in fighting the VAT gap have been appreciated abroad. Between 2013 and 2017, we recorded the second biggest reduction of the VAT gap among all EU member states. The gap shrank to 15.4 percent from 25.7 percent, and estimates show that in 2018 it was even lower, just 12.5 percent. It is a fact, however, that further possibilities of closing VAT collection loopholes are now smaller," the deputy minister said.

Skiba also said that in times of crisis the large-scale welfare programmes that the Polish government has introduced could be beneficial for the economy as they could act as a stabiliser.