The Ministry of Finance provided data on the condition of the Polish budget. The State Public Debt (PDP) at the end of the first quarter of 2023 amounted to PLN 1,209.9 billion, which means an increase of PLN 193 million compared to the end of 2022.
According to the Ministry of Finance, the change in PDP in the first quarter of 2023 was the result of:
— an increase in the debt of the government subsector by PLN 1.65 billion (+0.1%), including the consolidated debt of the State Treasury by PLN 1.86 billion (+0.2%),
— a decrease in the debt of the local government subsector by PLN 1.45 billion (-1.6%), with a decrease in the debt of local government units and their associations (LGUs) by PLN 1.57 billion (-1.8%),
— a decrease in the debt of the social insurance sub-sector by PLN 8.2 million (-26.6%).
Current PDP levels are all-time highs. At the end of 2021, it was about PLN 1,149 billion, PLN 1,112 billion a year earlier, and PLN 991 billion at the end of 2019, the last one before the pandemic. At the end of 2015, it was PLN 877 billion. However, it is hardly surprising that nominal debt will increase, given the rate of economic growth or inflation. The structure of the debt, its servicing costs and its size in relation to GDP are of key importance.
The debt of the general government sector (EDP debt), which is one of the elements of the Maastricht fiscal criterion, amounted to PLN 1,531.8 billion at the end of the first quarter of 2023, which meant an increase of PLN 19.5 billion (+1.3% vs. ) compared to the end of 2022. This measure of debt is also the largest in history. At the end of 2021, the EDP amounted to PLN 1,411 billion, in 2020 to PLN 1,337 billion, and in 2019 to PLN 1,046 billion. At the end of 2015, this type of debt was worth PLN 923 billion.
Difference between PDP and EDP debt (PLN billion)
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The change in the amount of EDP debt in the first quarter of 2023, apart from changes in EDP, was primarily affected by:
— an increase in the consolidated debt of the COVID-19 Prevention Fund (FPC) by PLN 6.19 billion,
— an increase in the debt of the Armed Forces Support Fund (FWSZ) by PLN 3.87 billion,
— a decrease in deposits on the account of the Ministry of Finance and treasury securities held by funds located in BGK by PLN 9.59 billion, which resulted in an increase in EDP debt as a result of a decrease in the consolidation of mutual liabilities.
It is worth noting that EDP’s debt also includes liabilities incurred e.g. by Bank Gospodarstwa Krajowego and the Polish Development Fund, and these began to grow rapidly after the pandemic. Of the mentioned amount of EDP’s debt, approx PLN 1 trillion 210 billion it’s a debt strict (PDP), and the “missing” PLN 322 billion is a debt outside the state budget, and this is the amount that the consolidation debate is about and this element is criticized by the opposition. The problem is that this debt is formally beyond the control of the parliament. At the end of 2019, such debt amounted to only PLN 55 billion, while in 2015 it was only PLN 46 billion. The structure of debt beyond the control of the parliament is well illustrated by the chart above.
When trying to assess the size of the state’s debt, it is necessary to refer to the size of the economy. And here is good news, because the ratio of EDP debt to GDP at the end of the first quarter of 2023 amounted to 48.1 percent, which means a decrease compared to the end of the previous year by 1 percentage point. Poland fares well against the background of European Union countries, where the average is as much as 84 percent. The record holders are Greece and Italy (170% and 145% respectively). But, for example, the Czech Republic and Romania have a slightly lower rate than Poland (44% and 47% respectively).
However, our debt ratios will continue to rise. In the latest Update of the Convergence Program (APK), presented at the end of April, the Ministry of Finance assumes that in 2023 EDP’s debt will amount to 50.5 percent. GDP, in 2024 – 52.4 percent, in 2025 – 53.6 percent, and in 2026 – 55.4 percent. Although the rate is growing, it remains below the EU average of 85%. and a prudential threshold of 60%.
EDP debt to GDP ratio in the European Union (%)
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The ratio of PDP to GDP at the end of the first quarter of 2023 amounted to 38 percent, which meant a decrease compared to the end of the previous year by 1.3 percentage points.
See also: Poland’s economic credibility is depressing. Disturbing data
2023-06-12 14:49:29
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