Government adopts revised bugdet plan for 2024 with higher deficit

This year’s budget deficit was initially set to reach 184 billion PLN, but the government approved a draft amendment to the 2024 budget on Tuesday.

"The finance minister has proposed a budget amendment for this year. The deficit will be larger, and it needs to be transparently recorded in the budget law," Prime Minister Donald Tusk stated at a press conference following Tuesday’s government session.

"In the 2024 budget amendment, the budget deficit will be raised by 56 billion PLN, bringing it to 240.3 billion PLN," the finance minister stated. He emphasized that there are no changes on the expenditure side of the budget, which remains at 866.4 billion PLN.

Among the reasons necessitating the budget revision, Andrzej Domański cited inflation as a primary factor.

"Inflation is clearly below the forecast set in the 2024 budget. The projected inflation rate in the budget was 6.6%, but we now see an average annual inflation rate of around 3.7%," the minister said. He noted that this is good news for households but results in lower-than-expected VAT revenue.

As explained on the website of the Chancellery of the Prime Minister (KPRM), the amendment to the budget for 2024 is due to the need to provide financial support to local governments and to update the forecast of state budget revenues.

"As a result, the maximum deficit level will change. As part of the amendment, the government does not foresee any change in the total amount of expenditures for 2024," we read.

KPRM reported that the macroeconomic outlook for 2024 has deteriorated compared to the budget law that was adopted at the beginning of this year. According to the current forecast, the nominal GDP growth rate in 2024 will be 6.8%, compared to the previously planned growth rate of 9.5%.