Record Defense and Healthcare Spending, Citizen Benefits, Economic Revival, 3.9% GDP Growth, and Declining Unemployment – Key Directions of Fiscal Policy for Next Year.
On Wednesday, August 28, 2024, the Council of Ministers approved the draft budget for 2025. The details were presented at a press conference by Prime Minister Donald Tusk and Minister of Finance Andrzej Domański.
2025 Budget Plan
The government of Donald Tusk inherited financial burdens generated by the previous administration. In 2025, the state budget will repay PLN 63.2 billion in obligations related to bonds and interest from the Polish Development Fund and the Bank Gospodarstwa Krajowego.
“The war necessitates a change in the structure and proportion of expenditures across many areas, including the economy. We inherited a state in poor condition from our predecessors. We have set a very high bar for ourselves, and this reflects our overall policy philosophy. Despite difficult circumstances, we have achieved what is currently happening in Poland: inflation under control, record economic growth, real increases in the minimum wage, and the launch of key investments, especially those related to energy and rail infrastructure,” explained the Prime Minister.
The main budget assumptions for 2025 include projected revenue of PLN 632.6 billion and expenditures of PLN 921.6 billion. The government aims to restore the budget’s constitutional significance and ensure transparency in public fund flows.
“The 2025 budget is being prepared under conditions of a clearly accelerating Polish economy. After the zero economic growth we inherited from our predecessors, we expect the Polish economy to grow by 3.1% this year and further accelerate to 3.9% in 2025,” announced Minister of Finance Andrzej Domański.
The government expects the state budget deficit to reach PLN 289 billion, driven by previous commitments and the restoration of the central role of the state budget.
“This deficit should be understood in a comparable context, considering that it includes PLN 34.7 billion in repayments to the PFR and PLN 28.5 billion to the COVID-19 Countermeasure Fund. We also secured funds for the reform of local government revenues, and this amount includes the statutory increase in healthcare spending and the absence of profit payouts from the NBP. Under comparable conditions to 2024, it would amount to PLN 181 billion,” explained the Finance Minister.
In terms of expected revenues, the Council of Ministers anticipates a significant increase in VAT revenue by PLN 50 billion, CIT revenue by over PLN 9 billion, and excise tax revenue by over PLN 8 billion.
Record Defense Spending
Ensuring the safety of Polish citizens is one of the current government’s priorities. In 2025, national defense spending will reach a record high of PLN 186.6 billion, an increase of PLN 28.6 billion from this year.
“We have prepared a budget of strength and construction. We will build what is necessary for both Poland’s direct security and energy security. We have also decided on record-high defense spending,” emphasized Prime Minister Donald Tusk during the press conference.
The planned military expenditures, including salaries for professional soldiers, will amount to 4.7% of GDP. The 2025 budget also includes costs borne by the Armed Forces Support Fund.
Health Care for the Polish People
The second pillar will be record-high funding for healthcare. The Council of Ministers set the 2025 budget for this purpose at PLN 221.7 billion, approximately 16% more than current levels.
“We continually think about supporting citizens. We will allocate nearly PLN 222 billion for healthcare. This represents a record increase in spending, nearly PLN 31 billion more. Within this budget, we continue important programs, such as in vitro funding, for which we have allocated PLN 500 million,” announced the Chairman of the Council of Ministers’ Economic Committee.
In 2024, healthcare consumed PLN 190.9 billion in public funds.
Socio-Economic Measures
The Council of Ministers decided to maintain programs such as “Family 800+” and “Good Start,” the 13th and 14th pension payments, support for people with disabilities, and the securing of contributions for those on parental and maternity leave.
“In 2024, while adjusting the budget inherited from PiS, we were obliged to make significant payments due to previous commitments that needed to be funded. A classic example here is the pre-election “Family 800+” program. Despite these serious challenges, we not only ensured its financing but also decided on record-high raises for teachers and the entire budgetary sector. We recently made decisions that will result in a radical increase in social worker salaries, unprecedented by previous standards. The so-called ‘grandparental benefit’ will be paid out this autumn,” outlined the Prime Minister.
Next year will also see a 5% salary increase for teachers, public sector employees, ZUS, and KRUS.
“In 2024, we are taking action. The budget outlines our intentions and actions for 2025. It will be a generous budget. Economic growth will be reflected in the pockets of Polish citizens. One does not contradict the other. The real wage increase has clearly outpaced inflation,” said Prime Minister Donald Tusk.
Starting March 1, 2025, the government plans to allocate PLN 24.2 billion for indexation of benefits. During the Council of Ministers meeting, a decision was made to include the so-called widow’s pension in the budget, allocating PLN 3.2 billion for this purpose.
“We insisted on this, we achieved it, and we will continue to ensure that economic growth and the good condition of the Polish economy are combined with financial security for people, especially those most in need. This is the greatest achievement we can be truly proud of,” stated the Prime Minister.
Thanks to the improved pace of economic growth, it is predicted that unemployment will decrease to 4.9% in 2025, and the average wage in the national economy will increase by 7.1%.
“I would like to point out that in 2024 we are witnessing the highest real wage growth of Poles in the 21st century, exceeding 9%. We believe that wages will continue to grow significantly in real terms next year as well,” said Minister Domański.
The draft budget bill for 2025 will be submitted to the Social Dialogue Council.
