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POLAND: This Year's Budget Deficit Target Raised More Than Expected

POLAND
PolandCEEMEAEM BulletBulletGlobalEmerging Market NewsRegion
  • Finance Minister Andrzej Domanski announced that the cabinet agreed to amend the fiscal deficit target for this year by PLN56bn to PLN240.3bn, which seems to have exceeded sell-side expectations and forecasts circulated in the local media. The finance czar said that the expenditures will stay unchanged, but lower inflation (the 2024 CPI outlook was slashed to +3.7% Y/Y from +6.6%) weighs on VAT collections, weaker macro environment abroad saps income from corporate taxes, while the NBP did not post financial gain which could be transferred to the budget.
  • The announcement about the imminent tweaks to the 2024 budget came out after hours on Tuesday. Elsewhere, yesterday's POLGB auction attracted lacklustre demand. Finance Minister Domanski attributed the recent bond weakness to investor concerns over the upcoming US presidential election, but the expected budget amendments may have also played a role.
  • The Cabinet's Economic Committee will today discuss energy subsidies for next year amid the realisation that they may cost more than the initially assumed PLN2bn. Business Insider sources suggested that the bill could be closer to PLN4bn but it was not clear whether all of the costs would be covered by the state budget.
  • Puls Biznesu reported that the National Bank of Poland (NBP) is studying the reserve requirement ratio amid suggestions from the MPC that its current level might be too high.
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  • Finance Minister Andrzej Domanski announced that the cabinet agreed to amend the fiscal deficit target for this year by PLN56bn to PLN240.3bn, which seems to have exceeded sell-side expectations and forecasts circulated in the local media. The finance czar said that the expenditures will stay unchanged, but lower inflation (the 2024 CPI outlook was slashed to +3.7% Y/Y from +6.6%) weighs on VAT collections, weaker macro environment abroad saps income from corporate taxes, while the NBP did not post financial gain which could be transferred to the budget.
  • The announcement about the imminent tweaks to the 2024 budget came out after hours on Tuesday. Elsewhere, yesterday's POLGB auction attracted lacklustre demand. Finance Minister Domanski attributed the recent bond weakness to investor concerns over the upcoming US presidential election, but the expected budget amendments may have also played a role.
  • The Cabinet's Economic Committee will today discuss energy subsidies for next year amid the realisation that they may cost more than the initially assumed PLN2bn. Business Insider sources suggested that the bill could be closer to PLN4bn but it was not clear whether all of the costs would be covered by the state budget.
  • Puls Biznesu reported that the National Bank of Poland (NBP) is studying the reserve requirement ratio amid suggestions from the MPC that its current level might be too high.