After the looming amendment of the public finances law, Poland will use four security thresholds related to the public debt-to-GDP ratio instead of the current three thresholds. Two of the current thresholds that the ministry of finance wants to lower will concern the new spending rule.
Under the draft amendment adopted by the government earlier this week, the thresholds related to the spending rule will be cut by 7pps - to 48% and 43% from 55% and 50%, respectively. These proposals have been linked to the recently-administered changes in the pension system (the transfer of assets from privately-owned open pension funds has lowered public debt by 8-9pps).
The ministry stressed that after the amendment takes effect, the thresholds will be 43%, 48%, 55% and 60% (the last threshold is written into the Polish constitution). Passing the 55% would trigger the need to balance the state budget for the following year and to make sure that the debt-to-GDP ratio is lowered.
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