The European Commission announces that an excessive deficit procedure will be launched for 7 countries, including Poland. The reason is to exceed the 3% GDP limit. The Commission study shows that this year the deficit in Poland will exceed 5%, and next year it is expected to increase.
The excessive deficit procedure (EDP) is simply a European Commission tool to control and reduce excessive budget deficits in EU associate States. In the case of Poland, this means that Brussels will closely monitor the financial situation of the country and control public expenditure.
Why did Poland exceed the permissible deficit level?
According to the Commission data, Poland's deficit this year will exceed 5% of GDP, which goes well beyond the acceptable 3% in the European Union. The reasons for this can be complex, covering both economical crisis and current government policies.
Recommendations and further steps
On Friday, the European Commission will send recommendations to Warsaw that will propose concrete measures to improve public finances. Over the next fewer days, the Commission will take the final decision to launch the excessive deficit procedure and give its opinion to the associate States.
Possible consequences
If Poland ignores the Commission's recommendations, this can lead to serious consequences. For non-euro area countries, specified as Poland, sanctions may include suspension of payments of EU funds. Poland was already covered erstwhile in 2009, which lasted six years before the Commission considered that the situation had been corrected sufficiently.
Responses and expert opinions
Financial experts stress that spending monitoring and close control can aid stabilise the economical situation. However, possible sanctions and restrictions on access to EU funds may have negative effects on the Polish economy.
How can Poland improve the situation?
The introduction of fiscal reforms, the simplification of unnecessary expenditure and the improvement of efficiency in public finance management are only any of the steps that can aid Poland get out of the excessive deficit procedure.
It is crucial that the Polish government take appropriate action and cooperate with the European Commission to avoid further financial problems.
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