Budget Deficit in Poland – a Choice and a Necessity

Abstract

A balanced budget implies a necessity for budget revenue and budget expenditure to be compatible so that financial liquidity of the budget sector is obtained. In practice a full synchronisation between income and expenditure is hard to achieve, hence an imbalance between them in the form of budget surplus or budget deficit. The latter is the most frequent in most of the countries with a market economy. The aim of the article is to present budget imbalance from both the theoretical and practical point of view in Poland. The article constitutes a confirmation for conclusions put forward in an article published in Bank i Kredyt in 1997 which assumed unavoidability of budget deficits in Poland in the years that followed and the fact that the budget deficit was forced. Despite the fact that Poland met the satisfactory deficit target of below 3% of GDP and the public debt amounted to much below 60% of GDP (mainly resulting from redemption of treasuries from OFE (Open Pension Funds) within the framework of the OFE reform), an increase of the deficit and the debt in value terms can be observed.

Keywords

• Budget deficit, public debt, budget balance, budget imbalance