High public debt servicing costs for the agency model of debt management in Poland

Every year, Poland closes its State budget with deficits. Those have amounted to 24–42 billion of PLN in the last 16 years. What is more, the entire public finance sector deficits were, up to 2015, even higher – which explains more frequently published statistics related to the State budget deficit in contrast to the entire public finance sector. The finances of the entire public finance sector in the years 2009–2011 were closed with significantly high deficits (public finance sector deficit reached over PLN 85bn in 2010). General government deficit amounted to 7,3% of GDP (2010–2011). The year of 2001 is especially worth noting, as that is when the discipline of public finance relaxed in Poland. State budget deficit doubled in contrast to the previous year (also in relation to GDP) and has not decreased ever since. It is not denied by the period 2006–2007, when State budget deficit decreased significantly. It must be noted that this was time of prosperity in both Poland and worldwide – Poland noted GDP growth of almost 7%, and despite significant increase in tax revenue, Poland did not manage to achieve budget surplus. It is worth mentioning that 12 from 28 UE countries succeeded to generate general government surpluses in 2007, and 10 countries in 2006 (tab. 1). Tab. 1. State budget deficit, public finance sector deficit and general government deficit in Poland in the years 2000–2016