Poland Sees 7.1% Deficit in 2027 as Defence Costs Surge

Poland expects its general government budget deficit to remain at 7.1% of GDP in 2027, unchanged from the level now forecast for 2026, as record military equipment deliveries drive up spending. Finance Minister Andrzej Domanski said defence spending is planned at 198 billion zlotys ($53.5 billion) next year, equivalent to more than 4.5% of GDP. The government projects total revenue of 695 billion zlotys against expenditures of 977.6 billion zlotys, resulting in a budget deficit of 286.6 billion zlotys.

Poland’s defence spending has risen sharply since Russia’s invasion of Ukraine, while the country remains under the European Union’s excessive deficit procedure. ING analysts said Poland appears to be making little progress toward bringing its deficit below the EU’s 3% target, potentially forcing future fiscal consolidation. Domanski said the deficit would have been significantly lower if military equipment deliveries were closer to 2025 levels.

Meanwhile, higher borrowing costs are adding pressure to public finances. Gross borrowing needs are expected to decline to below 565 billion zlotys in 2027, from 600 billion zlotys in 2026, but debt-servicing costs are projected to rise to 107 billion zlotys, up 17 billion zlotys year-on-year. The government forecasts economic growth of 3.0% and inflation of 2.8% in 2027, compared with 3.6% growth and 3% inflation expected this year.

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