Poland faces 281.2 billion PLN deficit in 2027 budget as EU recovery funding ends

Fiscal pressures in the 2027 draft budget

The Polish government adopted the draft budget for 2027, projecting state revenues of 696.4 billion PLN, expenditures of 977.6 billion PLN, and a budget deficit of 281.2 billion PLN. According to Business Centre Club chief economist Paweł Wojciechowski, the general government deficit is projected at 7.1% of GDP for both 2026 and 2027, following 7.3% recorded in 2025. Wojciechowski noted that budget revenues are assumed to rise by nearly 11% compared to the expected 2026 outcome, driven by a 9.5% increase in VAT receipts and CIT growth of nearly 18%. Analyses from the International Monetary Fund and the Excessive Public Debt Threats 2026 report show that stabilizing the debt trajectory requires improving the primary balance by more than 4 percentage points of GDP, or roughly 160 billion to 166 billion PLN. General government debt is projected to climb from approximately 59.7% of GDP in 2025 to 72.7% in 2028.

That would mean a third consecutive year with a deficit above 7% of GDP, and that is with economic growth around 3%, not during a recession.

Shifting EU transfers and macro outlook

Poland's net financial balance with the European Union is projected to decline to 33.5 billion PLN in 2027, down from 84.3 billion PLN in 2026 and roughly 60 billion PLN in 2025. In the 2027 budget justification, the Ministry of Finance projected EU transfers to Poland at 81.1 billion PLN against a Polish national contribution of approximately 47.6 billion PLN. The contraction stems from the conclusion of the National Recovery Plan (KPO), which provided 31.4 billion PLN in 2024, 40.4 billion PLN in 2025, and an expected 48.5 billion PLN in 2026, before falling to zero in 2027. Regular non-KPO structural, cohesion, and agricultural transfers are projected to rise from 77 billion PLN in 2026 to 81.1 billion PLN in 2027. Speaking at the Polish Economic Institute on Monday, Finance and Economy Minister Andrzej Domański stated that Poland would remain a net beneficiary of the broader upcoming multi-year EU budget while developing alternative funding mechanisms like Innovate Poland and Personal Investment Accounts.

Economists anticipate a moderation in economic output following the conclusion of KPO financing. PKO BP chief economist Piotr Bujak projected GDP growth will slow from 3.5% in 2026 to 2.8% in 2027, alongside a deceleration in investment growth from 10% in 2026 to 2% in 2027. ING Bank Śląski chief economist Rafał Benecki projected 2027 GDP growth of 3.2%, observing that disbursed funds will continue circulating through the broader economy.

We have long assumed such a deterioration in the balance due to the end of the National Recovery Plan.

Public sentiment and debt thresholds

Public sentiment regarding economic conditions has tracked downward in recent polling. An OGB survey conducted via computer-assisted telephone interviewing between 18 and 22 September 2026 on a sample of 1,000 adults found that 52.18% of respondents believe Poland's economic affairs are heading in the wrong direction. By comparison, 33.88% evaluated the direction positively, while 13.94% expressed no opinion. Negative sentiment had previously reached 51.73% in October 2025, 47.92% in January 2026, and 50.25% in August 2026.

Domestic public debt is also approaching the statutory threshold of 55% of GDP. Breaching this threshold under the Public Finance Act triggers statutory fiscal constraints on subsequent state budgets. Sławomir Dudek of the Fiscal Council and Ludwik Kotecki of the Monetary Policy Council warned of the risks associated with approaching the limit, while Minister Domański confirmed the probability of reaching 55%, which government debt strategy projections anticipate by 2028. Fitch previously lowered Poland's credit rating outlook to negative, citing consolidation challenges and governance frictions.