WARSAW - Poland is assuming it will be among the countries the European Commission opens proceedings against over its budget deficit, the finance ministry told state news agency PAP on April 8, adding that Warsaw and Brussels are in dialogue on the issue.

In the European Union, if a country’s deficit is above 3 per cent of gross domestic product (GDP), it is put under an excessive deficit procedure and must cut it by 0.5 per cent of GDP annually.

The rules were suspended between 2020 and 2023 due to the Covid-19 pandemic and the war in Ukraine.

Poland’s general government deficit was 5.1 per cent of GDP in 2023, according to preliminary data from the statistics office.

“It should... be assumed that the excessive deficit procedure will be opened against Poland, as the European Commission will be obliged to make such a move,” the finance ministry was quoted as saying by PAP, adding that a “working dialogue” on the issue was ongoing.

“In the opinion of the Ministry of Finance, the high deficit in Poland is the result of the war in Ukraine and Poland’s massive expenditure on modernising the army, eliminating the effects of the energy crisis and helping refugees from Ukraine,” it said.

It added that increased defence spending would be considered a mitigating factor in the excessive deficit procedure.

The latest reform of the European Union’s two-decades-old fiscal rules sets a steady pace of deficit and debt reduction from 2025 over four to seven years, with the longer option available if a country undertakes reforms and investments in areas the EU prioritises.

Poland’s finance ministry said that, in total, 13 EU countries may face excessive deficit procedures. REUTERS