Biznes Fakty
Poland's public debt. A huge amount
The debt ratio of the general government sector, calculated using the EU methodology, reached 55.6 percent of GDP by the end of 2024, as reported by the Ministry of Finance. In nominal terms, this represents a historic high of over two trillion złoty. „The fiscal sector is still significantly unbalanced,” noted PKO BP analysts on Tuesday.
„The EDP debt-to-GDP ratio at the conclusion of the fourth quarter of 2024 stood at 55.6%, reflecting an increase of 2.1 percentage points (pp) from the preceding quarter and by 5.9 pp in comparison to the close of 2023,” stated the Ministry of Finance.
Debt as per EU methodology
The debt of the general government sector (EDP debt), a key component of the Maastricht fiscal criterion for eurozone membership, was PLN 2,011 billion at the end of 2024, indicating a rise of PLN 114 billion (+6.0%) during the fourth quarter of 2024 alone and an increase of PLN 320.6 billion (+19.0%) compared to the end of 2023.
When evaluating the economy’s condition, economists primarily consider the public debt to GDP ratio. Poland ranks in the middle among EU countries regarding debt and is considerably below the EU average (81.6% of GDP at the end of Q3 2024). Furthermore, at the end of 2024, Poland’s EDP debt surpassed PLN 2 trillion for the first time.
As per the Ministry of Finance, the rise in debt during the fourth quarter was influenced by alterations in the state public debt (PDP, national methodology), including an increase in the debt of the government sub-sector, an uptick in the COVID-19 Countermeasures Fund’s debt, and an escalation in the debt of the Armed Forces Support Fund.
Debt as per national methodology
The state public debt at the conclusion of the fourth quarter of 2024 reached PLN 1,611 billion, which signifies an increase of PLN 113.5 billion (+7.6%) in just the fourth quarter of 2024 and an increase of PLN 283.5 billion (+21.3%) compared to the end of 2023.
The PDP to GDP ratio at the end of the fourth quarter of 2024 was 44.6%, having risen by 2.3 percentage points compared to the prior quarter and by 5.5 percentage points compared to the end of 2023, as indicated by the Ministry of Finance.
Fiscal zone „far from balance”
On Tuesday, the Central Statistical Office also revealed that the general government deficit in 2024 was 6.6% of GDP, in contrast to a deficit of 5.3% of GDP in 2023. The data for 2024 is less favorable than what was anticipated by analysts at PKO BP.
„The fiscal sector is still significantly unbalanced, primarily due to necessary expenditures, including those for defense and infrastructure projects,” they noted on Tuesday morning, prior to the release of the Central Statistical Office data.
„In the upcoming years, the Ministry of Finance plans to implement a gradual fiscal consolidation, ensuring it does not hinder economic growth,” they added.
According to the prior forecasts from the Ministry of Finance, the projected ratio of general government debt (as per the EU definition, EDP debt) was to reach 54.6% in 2024, increasing to 58.4% in 2025, then to 61.3% in 2027, and decreasing to 61.2% in 2028.
– We opted for a four-year trajectory in the plan (for the years 2025-2028 adopted by the government – ed.). It is crucial for us to enhance as quickly as possible, particularly concerning the parameters associated with the debt level, aiming to drop below 60 percent as swiftly as possible. The four-year path implies a faster reduction in debt, enhancing credibility with the markets – stated Minister of Finance Andrzej Domański during a meeting with journalists in October.
– The greater the debt level, the higher the servicing costs. The longer we remain above 60 percent, the more challenging it becomes. Our plan envisions falling below 60 percent by 2030 – he further elaborated.
