The situation is difficult, but not yet hopeless. However, it could change quickly, economists say, outlining possible scenarios. According to a simulation published in the EU’s “Debt Sustainability Monitor,” public finance debt in Poland in 2035 could reach as high as 107% of GDP. By the end of 2025, public debt had reached 59% of GDP. According to estimates from the Ministry of Finance, it could rise to 65% of GDP in 2026, thus exceeding the constitutional limit of 60%. These are concerning forecasts, but a tragic situation may not occur if the government takes effective action – Zsolt Darvas, a Hungarian economist and analyst at Bruegel, says in an interview with Grzegorz Siemionczyk of Money.pl.
“Poland is gradually moving from developing to developed economies. Therefore, public debt around 100% of GDP in the long run does not have to be excessive. It would be extremely dangerous, however, to increase it to that level within a decade. That would mean maintaining a very large deficit in public finances, and thus huge borrowing needs,” the economist explains on Money.pl.
Could joining the euro zone be a lifeline for Poland’s public finances?
One solution suggested in an interview with a Money.pl journalist is for Poland to join the monetary union. To pursue this, our country would need to meet convergence criteria, such as price stability, public finance stability, and interest rates. A necessary condition to start the process that brings a country closer to euro entry is also participation in the ERM II mechanism, the so‑called pre‑euro zone, where the national currency must be maintained at a stable level for at least two years. For now, Poland is far from meeting these requirements. Not to mention the lack of political will to do so.
Zsolt Darvas believes our country could apply for entry into the monetary union even with public debt rising above 60% of GDP.
“Italy, Belgium, and Greece entered the euro zone with debt exceeding 100% of GDP. In such cases, the condition is that the debt-to-GDP ratio falls at an appropriate pace – which is not precisely defined. Hungary, where debt is clearly above 70% of GDP, will also be able to join the monetary union before that ratio falls below 60% of GDP,” the Hungarian economist notes on Money.pl.
As he added in an interview with Grzegorz Siemionczyk, the biggest problem for Poland would be reducing the deficit below 3% of GDP.
Will Poland be cut off from the EU fund?
As an EU member, Poland must keep public debt below 60%. In fact, a similar provision is also in the foundational act, which prevents the government from exceeding this threshold. If this happens, it could have serious consequences. One of them could be restricted access to EU funds.
“Many EU states did not meet these requirements, but that does not mean they can simply ignore them. Even more so than the debt limit, this concerns the restriction of the deficit to 3% of GDP. The European Commission was able to enforce this fiscal rule more effectively. One sanction for prolonged breach of the budget deficit limit could be the suspension of EU fund payments. For a country that receives large amounts from the EU budget, this would be painful,” Zsolt Darvas, a Hungarian economist and Bruegel analyst, says on Money.pl.
He adds that Poland’s situation could improve with fiscal policy reform, including the introduction of a wealth tax, which would increase state budget revenues.
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