By Karl Badohal
WARSAW (Reuters) – Poland is taking steps to increase the transparency of its public finances Finance Minister Andrzej Domanski told reporters, amid rising debt servicing costs.
Measures will include a review of public finances, to be published by the ministry on Monday, reining in out-of-budget spending, and establishing an independent fiscal council to assess government policy, he said.
“I will be encouraging the government to move towards maximum transparency,” he told reporters on Friday in comments cleared for publication on Monday morning.
Poland is among nearly a dozen European Union countries at risk of being put under the bloc’s excessive deficit procedure, imposed on those whose deficit limits exceed 3% of gross domestic product (GDP).
Warsaw, whose deficit is seen increasing at year-end to 5.4% according to a Reuters poll, points among others to spending more than 4% of economic output on defence, as Russia continues its attack on neighbouring Ukraine.
Domanski said his aim was to repair public finances following several years of elevated off-budget spending by the previous Law and Justice (PiS) government since the COVID-19 pandemic.
“Starting April 30, state-owned development bank BGK will start publishing data on all of its funds in terms of execution and current plans on a quarterly basis,” he said.
He said he was in favour of merging some of BGK’s funds and the finance ministry would cooperate with the bank and other ministries on this.
LONG-TERM PLAN
Poland’s annual long-term financial plan, to be adopted by the government on Tuesday, will also include the framework for establishing a fiscal council to monitor government policy, including macroeconomic projections and the budget bill, Domanski said.
“It of course must be an independent institution and everything it publishes must be made public … It has to have its own firepower when it comes to criticizing the finance minister for submitted assumptions to the budget act.”
He said he expected the project to be made public within a few weeks.
Domanski noted that Poland’s debt servicing costs were among the highest in the EU and said he was looking at its smaller neighbour, the Czech Republic, as a guide.
“This is a problem that will get even worse in the coming years – the debt servicing costs in relation to GDP will increase, although fortunately only slightly,” he said, adding that policy changes at the U.S Federal Reserve and other main central banks were pressuring emerging markets.
“I am looking at the spread to Czech bonds – my goal is for this spread to narrow.”
Domanski also said he was eyeing more private investments, in addition to higher consumption, as a driver of economic growth. “Private investments are very important to me, which is why we are talking to investors in Poland and abroad.”
(Reporting by Karol Badohal; Editing by David Holmes)
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