Poland has recorded the European Union’s second-largest budget deficit when compared with the size of its economy, raising fresh concerns over the country’s fiscal trajectory despite its strong growth performance.
The budget deficit in Poland reached 7.3 per cent of GDP in 2025, more than double the EU average of 3.1 per cent and second only to Romania, where it stood at 7.9 per cent.
That placed Poland above 20 other EU countries that recorded budget deficits. Only Portugal, Greece, Ireland, Denmark and Cyprus avoided going into deficit.
Eurostat data show that Poland’s debt has increased by almost 11 percentage points since 2022. In the fourth quarter of 2025, Poland also recorded the EU’s third-largest annual increase in public debt.
Poland’s deficit has been climbing for a number of years, driven by high defence spending and increased welfare expenditure.
The EU placed Poland under its excessive deficit procedure in 2024, with Warsaw promising to bring the shortfall down to 5.5 per cent of GDP in 2025. That target has now been missed by a wide margin.
Under the EU’s Stability and Growth Pact, a member state’s budget deficit should not exceed 3 per cent of GDP. Countries that breach that threshold can be placed under the excessive deficit procedure, requiring them to take corrective action to reduce their budgetary shortfall.
The rising deficit was a major factor behind both Fitch and Moody’s changing Poland’s outlook from neutral to negative. Moody’s has indicated that it may lower the country’s credit rating in future.
At a party conference on April 25, Przemysław Czarnek, the conservative Law and Justice (PiS) opposition’s candidate for prime minister in next year’s parliamentary elections, seized on the debt issue and placed it in a broader historical context.
He recalled that, during the rule of the previous PiS administration, “public debt decreased despite two ‘atomic bombs’ that hit us: Covid-19 and the war in Ukraine”.
“Despite this, we reduced public debt by 2 percentage points relative to GDP, in the face of extremely difficult challenges, especially since 2020,” he said.
Czarnek contrasted that record with the performance of the present centre-left government led by Prime Minister Donald Tusk.
“Today, those who have been in power for 2.5 years have already increased public debt by 11 percentage points relative to GDP,” he said.
“What lies immediately ahead, this year, means nearly €700 billion in public debt, amounting to an increase of 17 per cent relative to GDP compared with 2023. That is a chasm. We are the fastest-indebted country in the EU and one of the fastest in the world,” he added.
In 2022, when the last PiS government was still in office, the budget deficit stood at 3.4 per cent of GDP. It rose to 5.2 per cent in 2023 as the fiscal effects of the pandemic, the costs of hosting almost 2 million Ukrainian refugees and higher defence spending triggered by Russia’s war in Ukraine came through.
Under the Tusk government, it rose to 6.4 per cent in 2024 and then to 7.3 per cent in 2025.
That deterioration has come despite healthy economic growth and despite the fact that, after Tusk came to office in late 2023, the EU unblocked post-pandemic funds that had been withheld by the European Commission during the PiS administration over alleged rule-of-law violations.
Despite Poland recording some of the highest GDP growth figures in the EU, that has not yet translated into large increases in tax revenue. The last significant rise in tax yield came during the previous PiS administration, when corporate income tax and VAT receipts rose strongly alongside robust economic growth.
The Tusk government has blamed the opposition-aligned President Karol Nawrocki for blocking some of its tax legislation. The President’s Chancellery has responded that, under the Constitution, the President cannot and does not veto the state budget, and that he did approve a tax on excess profits recorded by the banking sector.
The present administration has maintained all the welfare programmes introduced by the previous PiS government, while also pressing ahead with planned defence spending increases.
Economists have pointed out that, despite the high deficit, Poland’s actual level of public debt remains relatively low. In 2025, it stood at 59.7 per cent of GDP, considerably below the EU average of 81.7 per cent and still just within the 60 per cent ceiling set out in the Stability and Growth Pact.
According to the Polish finance ministry, however, public debt is projected to reach 75 per cent of GDP by 2029.
In its Debt Sustainability Monitor 2025, the European Commission projected that Poland’s public debt could climb to around 107 per cent of GDP by 2036 unless major fiscal reforms and spending cuts are implemented.
From today’s relatively modest debt level, that would mark a sharp deterioration and a potentially seismic change in Poland’s standing inside the EU. On such a trajectory, only Italy, France, Belgium and Spain would have a higher debt-to-GDP ratio.
Economist and Adam Smith Institute head Andrzej Sadowski told Euronews: “The example of Greece proves that being inside the EU nor even being part of the Eurozone necessarily protects a country from a major financial crisis.”
Other economists, though, have argued that Poland is better placed than Greece was to avoid such a crisis. They point to the fact that Poland has retained its own currency, the zloty, and has a stronger record of tax collection than crisis-hit southern European economies had before the eurozone debt crisis.
