Poland passes 2017 budget in controversial circumstances

By bne IntelliNews December 18, 2016

The Polish parliament passed the 2017 budget bill on December 16. The vote took place in controversial circumstances sparking doubt over its legality and large protests.

The budget bill assumes the Polish economy will grow 3.6% in 2017, while inflation will rise to 1.3% on average. In GDP terms, the deficit is assumed at 2.9%.

However, the bill was passed outside the lower house chamber by a show of hands without the presence of the opposition or media. That led to large protests outside the parliament on the evening of December 16 and the following day, with critics claiming the PiS government is disarming democracy.

The growth target in the budget appears highly optimistic, but is fundamental in keeping the deficit below the EU threshold of 3%. PiS needs revenue to power a programme of enlarged expenditure.

Policies include a new child benefit scheme - estimated to cost some PLN23bn in 2017. The government will also kick off a costly reform of the pension system that reverses the previous administration's reform to raise the retirement age to 67.

Polish growth has been faltering of late. In the third quarter, the economy expanded only 2.5% y/y, with forecasts for the final three months of 2016 largely predicting growth of 2% at best. Most current forecasts for 2017 expect GDP growth below 3%.

Other key indicators contained in the budget bill assume wages will grow 5% in 2017, while employment will increase 0.7%. This should help keep consumption on elevated levels. Consumption has been the key driver of growth in 2016, while investment remains weak.

The budget bill was passed by PiS amidst much controversy, with the ruling party’s MPs leaving the plenary to vote in a different room after the opposition blocked the plenary in protest against limiting media access to the parliament. The opposition claims the vote was illegal because it is not clear whether PiS had the quorum to carry out with the vote. 

Related Articles

Poland isolated again as it threatens to block EU declaration

Poland will not sign the Rome Declaration if its demands for moulding the EU’s future are not reflected in the document, Prime Minister Beata Szydlo threatened on March 23. The statement could ... more

Polish ruling party's poll lead hit by EU spat

The popularity of Poland’s ruling party Law and Justice (PiS) has fallen below 30% for the first time since mid-2014, a poll showed on March 20. The survey, published by liberal newspaper ... more

Enea buys French utility out of Poland

Enea has acquired a 100% stake in Engie Energia Polska - the Polish business of French power company Engie - for PLN1.26bn (€290mn), the state controlled Polish utility said on March 14. The ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss