Let us remind. From 26 to 29 July, a written vote was held by the ambassadors of the member states on the launch of the procedure towards Poland and six other EU countries. The EU Council finally approved the launch of this procedure.
On 19 June, the European Commission proposed extending the excessive deficit procedure to seven countries: Poland, France, Italy, Belgium, Hungary, Malta and Slovakia, citing the lack of corrective measures.
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EU initiates excessive deficit proceedings against Poland
The excessive deficit procedure is triggered when a Member State’s fiscal deficit exceeds 3% of GDP or when public debt is above 60% of GDP. Its aim is to ensure that all Member States restore or maintain budget discipline and avoid excessive deficits. The ultimate goal is to keep public debt low or bring high debt to a sustainable level.
In the past, alongside decisions to initiate excessive deficit procedures against individual countries, the Commission has immediately made recommendations recommending a course of action. This year, this will happen later, in November. The plan is to combine these recommendations with work on national medium-term plans – a new fiscal rule introduced as part of the recent reform that requires countries to prepare plans to keep their finances under control.
EU countries have time to prepare these documents by October 15 at the latest, and can start working on them immediately after the European Commission presents them with the so-called fiscal paths on June 21. In these documents, Brussels has indicated how countries could exceed this limit within four to seven years.
Countries will choose the length of their “adjustment path,” i.e. whether they will implement corrective measures for four or seven years. Therefore, the excess deficit procedure will last for at least four years.
So far, Poland has been subject to excessive deficit measures twice: in 2004-2008 and 2009-2015.
Professor Bogaj advises Tusk. He talked about the central communications outlet.
About Poland’s excessive deficit, Fact spoke to Prof. Richard Bajaj. An economist who was very close to Jarosław Kaczyński’s party, he shared his advice on how Donald Tusk’s government should act. We heard, among other things, about the CPK.
– The government has to react and propose a reasonable reduction plan that is extended over time. Huge parts of the EU have excessive deficits and debts that are greater than ours. Much will depend on what growth looks like, because there are two ways out of the deficit: you can reduce expenditure as a percentage of GDP or you can increase the deficit, and it is important that if GDP and expenditure increase, their share as a percentage of GDP decreases. Nobody cares much about excessive deficits because there is no clear economic justification for adopting a 3% target. Deficit as a benchmark – economist comments.
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Should the government cut social programs due to excessive deficits?
– Not necessarily socially. How much will CPK cost? It is estimated at 155 billion. We have experience from all over the world that such large investments are rarely implemented within expectations. If it is fully implemented, it would be strange if it does not reach PLN 200 billion. I would throw this project in the trash. This is a monument being built by politicians. It will not be in the interests of passengers, and it will not be in the interests of the country’s defense either. Such an airport can be destroyed with two or three missiles. The professor says that distracting passengers is better. Bajaj.
“It is unfortunate that responsible policy should take into account objective factors,” he stresses. – A change in the tax structure is needed. The question is who should raise taxes? It must be recognized that PiS has brought the Polish economy into a more equitable financing system, mainly by lowering the tax rate for people at the bottom of the tax ladder and increasing the amount exempt from taxes – says a former member of PiS’s programme council.
Can the government defend itself by inheriting the excessive deficit from the United Right government? – It’s a bit like that, but to say that everything was done by its predecessors is a bit ridiculous. Despite everything, the PiS led to inflated spending and irrational spending – the economist sums up.
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(Truth, European Parliament, PAP)
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