Poland's budget deficit hits 108.2 bln PLN after May, exhausting 39.8% of annual limit in five months

Deficit nears 40% of annual cap

The deficit after five months stood at 108.2 bln PLN, almost identical to the 108.3 bln recorded a year earlier. It rose by nearly 19 bln in May alone, continuing a steady climb from 23.2 bln after January. The full-year limit set in the 2026 budget is 271.74 bln PLN, meaning 39.8% of that ceiling has been consumed in just 41.7% of the year.

Overall revenues reached 233.3 bln PLN, 36.1% of the annual plan, while expenditures totalled 341.5 bln PLN, 37.2% of the plan. Both grew compared with the same period of 2025 – revenues by 4.6% and expenditures by 3.1%.

Revenue struggles and tax shifts

Tax receipts contributed 210.9 bln PLN, up 5.7% year-on-year, but the composition shifted markedly. CIT revenue jumped 19% to 43.8 bln PLN following the increase of the bank tax rate to 30% from January. In contrast, PIT turned deeply negative at -20.7 bln PLN because the share of PIT proceeds transferred to local governments rose to 104.3 bln PLN from 93.7 bln a year earlier.

VAT, the largest revenue stream, edged up only 1.6% to 140.6 bln PLN. Growth in industrial output and retail sales helped, but two policy changes depressed the figure: the CPN programme cut the VAT rate on liquid fuels from 23% to 8%, and the rollout of the National e-Invoicing System (KSeF) shortened the default VAT refund period from 60 to 40 days, triggering faster refunds in April and May. Excise duty rose 2.7% to 36.2 bln PLN, also weighed down by CPN reductions on diesel and petrol; the excise relief under the programme is set to end on 30 June.

Spending patterns

Expenditure of 341.5 bln PLN was driven by three large items: transfers to the Social Insurance Institution (ZUS) at 78.3 bln PLN, national defence spending at 38.0 bln PLN, and public debt servicing at 31.6 bln PLN. The year-on-year increase of 10.2 bln PLN stemmed mostly from higher ZUS transfers and rising debt costs.