Pandemic caused huge spikes in deficit and debt: the economist

The actual Polish debt increased in 2020 to a level almost four times higher than indicated by the official data on the implementation of the state budget. This is the effect of, among others issue of bonds by PFR or BGK, not included in budgetary accounts. And although, in comparison with other European countries, Polish debt is still moderate, and no one denies the fact that intervention in the face of a pandemic was needed, continuing this course may pose a risk of crisis for Poland in the next three to four years.

"The problem with public finances is that we know that their condition is not the best because the pandemic has caused huge increases in deficit and debt, but we do not know exactly what the state is, because the government has used a number of so-called accounting tricks to hide it," prof. Witold Orłowski, an economist from the Vistula Academy of Finance and Business and the Warsaw University of Technology, said.

In his opinion, there are some data that had to be presented, eg Eurostat is demanding information about the real increase in the debt of the Polish state. It is known that it increased by PLN 300 billion. The government showed, using its own method, that the entire Polish state had a deficit of around PLN 80 billion, so it is clear that somewhere there were at least one hundred and several dozen billion zlotys hidden.

In 2020, the state budget deficit amounted to less than PLN 85 billion. Originally, even before the pandemic, it was to be the first-ever balanced budget, i.e. with a zero deficit. For 2021, the budget act provides for a similar shortage, i.e. PLN 82.3 billion. After five months of the year, the government showed a budget surplus of over PLN 9 billion, and as Prime Minister Mateusz Morawiecki announced on Tuesday, the surplus at the end of June amounted to over PLN 25 billion.

In July, the Supreme Audit Office (NIK)  published a report on the control of the implementation of the state budget in 2020, in which it accuses the government of a number of "accounting tricks" aimed at concealing the actual degree of the Polish state's debt and the fact that we have already exceeded the prudential threshold of 55 percent because the actual debt reported to the European Commission already accounted for 57.5 percent of GDP. These are bonds issued by the Polish Development Fund and Bank Gospodarstwa Krajowego, guaranteed by the government, but not officially issued by it.

"The anti-crisis shield and the financial shield were of course indispensable, no one denies it. Whether all this money was spent effectively, whether it went to the right place, we do not know, and here another audit of the Supreme Audit Office is needed," argues Prof. Witold Orłowski.

(Newseria)