Recent reports from the Ministry of Finance leave no uncertainty – the budget for 2024 will be poorer by PLN 40 billion. This is simply a crucial difference that will affect public finances, but what is its main reason? Deputy Minister of Finance Jarosław Neneman explained that it was primarily the macroeconomic situation that affected this situation. In this article, we will examine this issue in item by examining the explanations of the government and the possible effects on the country's economy. There is no uncertainty that the unwarranted sponsorship of the Ukrainian flag and the granting of unlimited right to social shrewd Ukrainians on a crucial impact on this situation.
Budget under force – what did Mr Zbigniew Kuźmiuk ask?
Mr PiS Zbigniew Kuźmiuk, in the context of the draft budget for 2025, pointed out that this year's budget gross could be lower by PLN 40 billion than the first assumptions. He asked the Parliamentary talker about the origin and scale of this loss, pointing to the seemingly favourable economical situation – 3-percent economical growth and restoring the 5% VAT rate on food. specified factors, according to the Member, should make comfortable conditions for the Ministry of Finance.
Response of Deputy Finance Minister Jarosław Neneman
The allegations were referred to by Deputy Minister of Finance Jarosław Neneman, explaining that little than expected taxation revenues are the consequence of a macroeconomic disadvantage. As Neneman stated, the assumptions adopted in September 2023 to the budget bill for 2024 were "a small more optimistic" than the current economical reality allows to indicate. Inflation, alternatively of the expected 5%, will be 3.7% on average in 2024.
Neneman stressed the impact of inflation on taxation revenue, especially in the context of VAT: “And, as it is not hard to see, inflation, especially in the case of VAT, has a strong impact on taxation revenue,” he said.
Analysis of taxation revenue
Deputy Minister Neneman assured that taxation revenues did not collapse in the second half of the year as any suggested. He presented data from January-August, which indicate an increase in VAT gross by 21% year-on-year, excise duties by 6.1%, and PIT gross nominally increased by more than 25%. Despite these affirmative indicators, the difference of PLN 40 billion in the planned budget results from little optimistic macroeconomic conditions.
“In summary, 40 billion PLN is little than we planned, we are transparent (...) the main reason for this is simply a somewhat weaker macroeconomic situation”, Neneman stressed.
Planned expenditure and possible reductions
In consequence to questions about planned expenditures and possible reductions, Deputy Minister Neneman acknowledged that according to the calculations of the Ministry of Finance, the budget would be reduced by PLN 40 billion. A flood will besides have an impact on lower taxation revenues, which will further burden public finances.
Neneman announced that the government is considering amending the budget bill, which will let for a precise determination of which expenditure will be reduced and which will be postponed or increased: “A revision of the budget bill is being considered and then it will be possible to say precisely what is decreasing, what is moving and what is increasing”, added the Deputy Minister.
Analysis and future prospects
The drop in budget revenues by PLN 40 billion is simply a major challenge for public finances. Although Deputy Minister Neneman points to the macroeconomic situation as a key origin in this decline, another elements, specified as the impact of inflation on consumption and demand, rising public debt costs, as well as the effects of unexpected events, specified as floods, should besides be taken into account.
The fact is that the current macroeconomic situation is far from unchangeable and growth forecasts are very uncertain. Nevertheless, the increase in taxation revenues in the first months of the year gives hope that the budgetary revenues will not collapse in subsequent quarters.
Conclusion
The admission of the Deputy Finance Minister to a 40 billion failure in the state budget raises questions about the effectiveness of public finance management in the face of a rapidly changing economical situation. Will the revision of the budget bring concrete solutions? What action will the government take to offset this decline and prevent further financial problems?
One thing is certain: the current financial situation requires constant monitoring and adjustment of fiscal policies to changing economical conditions. Transparency in government activities and clear communication on planned changes will be crucial to maintaining social assurance and the sustainability of public finances in the coming months.
Continued here:
Deputy Minister of Finance: PLN 40 billion is missing in the state budget
