PM Morawiecki To Ask Ministers To Seek More Spending Cuts

Prime Minister Mateusz Morawiecki will ask ministers to seek spending cuts, with the Defence Ministry set to be least affected, RMF FM reports. Morawiecki is set to touch on the matter during the Cabinet meeting starting from the top of the hour, where spending cuts will be one of the main points of discussion.

• RMF notes that each Cabinet member will be asked to cut the budget of their ministry by 3%-6% on average. The Ministry of Defence will be least affected as it looks to increase spending, due to the challenges posed by the ongoing war in Ukraine.
• The request represents the second wave of spending cuts after the proposal presented by the Ministry of Finance three weeks ago was deemed insufficient amid the burden from the Russian invasion of Ukraine and higher energy costs.
• While recent survey data suggest that there is public support for tighter fiscal policy, voters are unwilling to pay larger taxes and indicate preference for trimming expenditures which do not directly affect them.
• Poland has also adopted a more conciliatory tone in talks with Brussels on unblocking EU funds earmarked for Poland, despite resultant tensions between the Law and Justice party and its Eurosceptic junior coalition partner.
• A sharp pullback in Poland's government bond yields over the past few weeks suggests that the government has managed to convince investors that it will seek tighter fiscal policy than initially expected.
• Benchmark 10-year yield printed a two-month trough at 6.77% this morning as Poland's yields sit 12.9-15.2bp lower across the curve. Poland/Germany 10-Year yield spread operates at two-month narrows.