Public finances under pressure. Government releases budget reserves

The Ministry of Finance has begun to use financial reserves, which until now had been a safeguard for budget stability. According to data published by the ministry, at the end of April there were PLN 175 billion in budget accounts. This means a continuation of the downward trend. Compared to March, the reserve decreased by PLN 21 billion, and compared to the February maximum – when it reached PLN 204 billion – the decrease is even more pronounced.

Is the financial situation getting worse?

Is this a sign of a worsening public finance situation? This was partly to be expected. At the end of last year and at the beginning of this year, the Ministry of Finance was intensively offering bonds – even beyond current needs. Thanks to a lower than forecast deficit in 2024 and shifts in expenditure (e.g. earlier VAT refunds in December), at the beginning of the year the state of funds was higher than usual. This allowed the ministry to manage expenditure more freely in January – at that time the deficit amounted to only PLN 3,2 billion, or about 1,1% of the full-year limit.

Debt acceleration from February

However, in the following months the pace of debt clearly increased. According to "PB", although bond sales proceeded according to plan and interest in them among individual clients was breaking records, the situation began to deteriorate from February. The deficit in February reached PLN 36,3 billion, and in March it increased to PLN 76,3 billion - which is more than a quarter of the annual limit provided for in the budget act (PLN 288,8 billion).

Government reaches for reserves to cover borrowing needs

As a result, the Ministry of Finance most likely reached for funds from the reserve to cover growing borrowing needs, which are expected to be exceptionally high this year.