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Prime Minister Mateusz Morawiecki on the 2024 budget: it's a safe budget in difficult times

Republic of Poland

24.08.2023

The effects of the global pandemic and Russia's attack on Ukraine are still being felt, especially by our economy. Thanks to the successful fight against the VAT mafias, despite the global crises, we can announce a stable budget for unstable times. The Council of Ministers has provisionally adopted the draft budget act for 2024. A safe budget means solutions that will strengthen our security, including more funding for the army. It also means the continued provision of social programmes - such as "Family 800+" or the 13th and 14th pensions - which directly support millions of Polish women and men. A safe budget also means funds for health care and numerous investments that make citizens' lives more comfortable.

A safe budget in difficult times

Despite the global crises, state budget revenue will be double that of 2015, amounting to more than PLN 683.5 billion in 2024, while in 2015 it amounted to over PLN 289.1 billion.

Prime Minister Mateusz Morawiecki highlighted the three fundamental pillars of the budget:

1. Physical security, i.e. security of our borders, security through the funding of our army.
2. Financial security in the form of social programmes, support programmes and various shields that will continue. We are not leaving citizens alone in the face of crisis.
3. Protecting the health of Poles, i.e. both new jobs in health care and salary increases, modern equipment and hospital renovations.

A responsible budget also means more opportunities to further increase the potential of the Polish economy - and this despite the energy crisis caused by Russia's attack on Ukraine. Next year, GDP growth is expected to reach 3 per cent.

Funding for areas most important to Poles

We ensure, among other things:

• continuation of key social programmes (e.g. "Family 800+" or Family Care Capital), i.e. ongoing support for families. The budget also includes support for pensioners in the form of the 13th and 14th pensions. A total of PLN 137.7 billion will go to Polish families as part of the support;
• securing our borders and the services that keep Poland safe. We will allocate over PLN 158 billion for defence and the strengthening of national security, including the National Defence Fund. These are funds for the Police, State Fire Service and the Border Guard, among others;
• regular increases in health care funding. In 2024, health care will receive more than PLN 190.9 billion, i.e. around 6.2 per cent of GDP. This compares with PLN 77.2 billion (or around 4.7 per cent of GDP) in 2015;
• further investment programmes and the implementation of investments in areas such as health, land transport or culture and national heritage protection;
• increased spending in the areas of higher education and science, and agriculture.

We are additionally allocating 6.6 per cent for salary increases in the state budget sector - i.e. for firefighters, police officers, teachers, university personnel, etc. - and additional funds, 5.7 per cent, to the payroll fund in order to, among other things, offset the effects of the minimum wage increase.

"We want pay in state service - pay in the broadly defined public service, pay for teachers, firefighters - to be the most decent remuneration possible," explained the head of the Polish government.

Effective sealing of the tax system

"A safe budget for Poland, a safe budget for Poles. All this would not be possible without the recovery programme for the state's public finances," stressed Prime Minister Mateusz Morawiecki. He also added: "Our policy is completely different and it is based on healthy public finances - on winning the war we continue to fight against the VAT mafias, against tax criminals."

An efficient government entails an improved public finance situation. The fight against VAT mafias is one of the reasons why there is now more money in the budget, for example for social programmes. In 2015, the VAT gap was 24.1 per cent, compared to 4.9 per cent in 2022.

At the same time, recent years have seen systematic tax reductions introduced by the government:

• PIT reduction from 17 per cent to 12 per cent,
• higher tax-free amount of up to PLN 30 000,
• second tax threshold raised to PLN 120 000.

This will leave more money available to Poles, who will decide for themselves what they want to do with the money they have saved.

Key assumptions of the budget act for 2024

According to projections for 2024:

• budget revenue will amount to PLN 683.6 billion;
• budget expenditure will amount to PLN 848.3 billion;
• the deficit will amount to PLN 164.8 billion.

Further details are available in the communication after the Council of Ministers meeting.