Poland is set to face a concentration of major development spending in the coming years, ranging from defence and transport infrastructure to energy transformation. Economists argue that the key question will be whether the state directs funding towards investments that expand the economy’s long-term productive capacity or towards current consumption.
According to Professor Ireneusz Dąbrowski of the SET Foundation, Poland’s public finances are not yet in a dramatic condition. However, the country is approaching a point at which the absence of a rational programme could trigger a dangerous debt spiral.
“We are now facing a programme of highly ambitious investments, and we need to ask ourselves where the financing for all of this will come from. We are an economy with resources — already worth around USD 1 trillion, or PLN 4 trillion,” Dąbrowski, Professor at the Warsaw School of Economics and a member of the Monetary Policy Council, told Newseria.
“The key is to finance investment and physical capital that will serve future generations, rather than consumption that future generations will have to repay,” he added.
Record spending needs for defence, infrastructure and energy
The scale of the state’s financial needs is currently very high. Poland’s 2026 budget provides for expenditure of PLN 918.9 billion, revenue of PLN 647.2 billion and a deficit of no more than PLN 271.7 billion.
Record levels of funding are planned for defence, with more than PLN 200 billion allocated to this area, equivalent to 4.81% of GDP. In the years ahead, Poland will also need to finance major infrastructure projects, including the Central Communication Port, rail investments, the energy and digital transitions, and the construction of nuclear power facilities.
The Ministry of State Assets estimates that energy investments alone will amount to PLN 1 trillion over the next decade. Investments in rail, road and maritime infrastructure are expected to require several hundred billion zlotys more.
These investment needs coincide with a deterioration in public finances. Poland remains subject to the European Union’s excessive deficit procedure. The European Commission forecasts that the general government deficit will reach 6.5% of GDP in 2026, while public debt measured under EU methodology will continue to increase.
The Ministry of Finance expects general government debt to rise to 66.2% of GDP by the end of 2026.
“We are at a critical stage when it comes to the condition of public finances. It is not yet dramatic, but we are approaching the limit,” Dąbrowski said.
“If we do not begin a rational programme now, we may fall into a dangerous spiral in the future. At the current stage, given the state of public finances, there is no need to reduce spending that has already been introduced. However, any new expenditure must be considered very carefully and must be investment-oriented rather than consumption-oriented,” he added.
Predictable taxation and the fight against the shadow economy
One element of stabilising public finances should be an increase in state revenues, which requires predictable tax policy and measures to reduce the shadow economy.
According to a report by the Institute for Economic Forecasting and Analysis, the shadow economy accounts for 18.1% of Poland’s GDP. Professor Dąbrowski stressed that its growth limits the state’s ability to finance public tasks, including investments designed to strengthen the economy’s long-term potential.
This means that combating illegal trade is not only a fiscal issue but also an element of national security.
“The shadow economy is always a threat to the state. First, it reduces budget revenues that should be used to finance investments and prosperity. Second, it creates organised crime and opens gaps that can also be exploited by foreign criminal groups,” Dąbrowski said.
IPAG expects the shadow economy to decrease to 17.7% of GDP this year. However, the situation differs in certain sectors, including tobacco products.
According to Ministry of Finance data, the gap between projected and actual excise-tax revenues from tobacco products reached approximately PLN 4 billion. At the same time, data from the Almares Institute show that the value and share of the shadow economy in this market increased from 4.7% to 7.5% by the end of 2025, a rise of 59%.
The increase has been linked to sharp excise-duty rises on tobacco and nicotine products, as well as a departure from the excise-duty roadmap introduced in 2022. A similar trend is being observed in the spirits segment. The highly profitable criminal market for producing, smuggling and selling counterfeit medicines is also expanding.
“The earlier excise roadmap was a very sensible approach, and both entrepreneurs and other financial-market participants had already adapted to it,” Dąbrowski said.
“Sudden changes, introduced without prior communication about what is coming, always provoke counter-reactions. In this case, some businesses moved into the shadow economy, and this shift is becoming increasingly worrying,” he added.
Investments must strengthen future economic capacity
The discussion reflects a broader strategic dilemma for Poland: how to meet extraordinary spending needs without undermining fiscal stability.
Defence investment, transport infrastructure, clean-energy projects, nuclear power and digital transformation may all strengthen productivity, resilience and long-term growth. But economists warn that the effectiveness of this spending will depend on the quality of project selection, the predictability of regulation and the ability to maintain control over recurring expenditure.
Experts discussed the stability of public finances and strategic state decisions in an unstable geopolitical environment during the SET Congress, titled “Ambitious Poland: How to Strengthen the State in an Unstable World?”, held in Warsaw on 16 June.
