Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform Programme of Poland and delivering a Council opinion on the 2023 Convergence Programme of Poland
Date: 2023-05-24
Institutions: European Commission, Secretariat-General
Subjects: Poland, economic policy, economic recovery, economic reform, energy policy, fiscal policy, independence of the judiciary, social-security benefit, stability pact, stability programme

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   EUROPEAN COMMISSION  Brussels, 24.5.2023  COM(2023) 621 final  Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform Programme of Poland and delivering a Council opinion on the 2023 Convergence Programme of Poland {SWD(2023) 621 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the 2023 National Reform Programme of Poland and delivering a Council opinion on 
the 2023 Convergence Programme of Poland 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the  surveillance  of  budgetary  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular Article 9(2) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council2,  which 
established  the  Recovery  and  Resilience  Facility,  entered  into  force  on  19  February 
2021. The Recovery and Resilience Facility provides financial support to the Member 
States  for  the  implementation  of  reforms  and  investments,  entailing  a  fiscal  impulse 
financed  by  the  EU.  In  line  with  the  European  Semester  priorities,  it  contributes  to 
economic  and  social  recovery  and  to  the  implementation  of  sustainable  reforms  and 
investments,  in  particular  to  promote  the  green  and  digital  transition  and  make  the 
Member States’ economies more resilient. It also helps strengthen public finances and 
boost  growth  and  job  creation  in  the  medium  and  long  term,  improve  territorial 
cohesion  within  the  EU  and  support  the  continued  implementation  of  the  European 
Pillar of Social Rights. The maximum financial contribution per Member State under 
the Recovery and Resilience Facility was updated on 30 June 2022, in accordance with 
Article 11(2) of Regulation (EU) 2021/241.  

(2) 

On 22 November 2022, the Commission adopted the 2023 Annual Sustainable Growth 
Survey,3  marking  the  start  of  the  2023  European  Semester  for  economic  policy 
coordination. The European Council endorsed the priorities of the  survey  around the 

1 
2 

3 

OJ L 209, 2.8.1997, p. 1. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021 
establishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, p. 17). 
COM(2022) 780 final. 

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four  dimensions  of  competitive  sustainability  on  23  March  2023.  On  22  November 
2022,  on  the  basis  of  Regulation  (EU)  No  1176/2011,  the  Commission  also  adopted 
the  2023  Alert  Mechanism  Report,  in  which  it  did  not  identify  Poland  as  one  of  the 
Member States that may be affected or may be at risk of being affected by imbalances, 
and for which an in-depth review would be needed. The Commission also adopted a 
recommendation  for  a  Council  recommendation  on  the  economic  policy  of  the  euro 
area, which the Council adopted on 16 May 2023, as well as the proposal for the 2023 
Joint  Employment  Report  analysing 
the  Employment 
the 
Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights,  which  the 
Council adopted on 13 March 2023.  

implementation  of 

(3)  While the  EU economies are showing remarkable resilience, the  geopolitical  context 
continues  to  have  a  negative  impact.  As  the  EU  stands  firmly  with  Ukraine,  the  EU 
economic  and  social  policy  agenda  is  focused  on  reducing  the  negative  impact  of 
energy shocks on both vulnerable households and companies in the short term, and on 
keeping  up  efforts  to  deliver  on  the  green  and  digital  transition,  support  sustainable 
and  inclusive  growth,  safeguard  macroeconomic  stability,  and  increase  resilience  in 
the medium term. It also focuses heavily on increasing the EU’s competitiveness and 
productivity. 

(4) 

(5) 

On  1  February  2023,  the  Commission  issued  the  Communication  A  Green  Deal 
Industrial  Plan  for  the  Net-Zero  Age4  to  boost  the  competitiveness  of  the  EU’s  net-
zero  industry  and  support  the  fast  transition  to  climate  neutrality.  The  plan 
complements  ongoing  efforts  under  the  European  Green  Deal  and  REPowerEU.  It 
aims to provide a more supportive environment for scaling up the EU’s manufacturing 
capacity  for  the  net-zero  technologies  and  products  required  to  meet  the  EU’s 
ambitious climate targets, as well as ensuring access to relevant critical raw materials, 
including  by  diversifying  sourcing,  properly  exploiting  geological  resources  in 
Member States and maximising the recycling  of raw materials. The plan  is  based on 
four pillars:  a  predictable and simplified regulatory  environment, speeding up access 
to finance, enhancing skills, and open trade for resilient supply chains.  On 16 March 
2023,  the  Commission  also  issued  the  Communication  Long-term  competitiveness  of 
the EU: looking beyond 20305, structured along nine mutually reinforcing drivers with 
the objective to work towards a growth enhancing regulatory framework. It sets policy 
priorities  aimed  at  actively  ensuring  structural 
improvements,  well  focused 
investments and regulatory measures for the long-term competitiveness of the EU and 
its Member States. The recommendations below help address those priorities. 

In 2023, the European Semester for economic policy coordination continues to evolve 
in  line  with  the  implementation  of  the  Recovery  and  Resilience  Facility.  Fully 
implementing  the  recovery  and  resilience  plans  remains  essential  for  delivering  the 
policy priorities under the European Semester, as the plans address all or a significant 
subset  of  the  relevant  country-specific  recommendations  issued  in  recent  years.  The 
2019, 2020 and 2022 country-specific recommendations remain equally relevant also 
for  recovery  and  resilience  plans  revised,  updated  or  amended  in  accordance  with 
Articles 14, 18 and 21 of Regulation (EU) 2021/241.  

4 
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COM(2023) 62 final.  
COM(2023) 168 final.  

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(6) 

(7) 

(8) 

6 

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The REPowerEU Regulation6, adopted on 27 February 2023, aims to rapidly phase out 
the  EU’s  dependency  on  Russian  fossil  fuel  imports.  This  will  contribute  towards 
energy security and the diversification of the EU’s energy supply, while increasing the 
uptake of renewables, energy storage capacities and energy efficiency. The Regulation 
enables  Member  States  to  add  a  new  REPowerEU  chapter  to  their  national  recovery 
and  resilience  plans  in  order  to  finance  key  reforms  and  investments  that  will  help 
achieve the REPowerEU objectives. They will also help boost the competitiveness of 
the EU's  net-zero industry  as  outlined in  the  Green Deal  Industrial Plan for the  Net-
Zero Age and address the energy-related country-specific recommendations issued to 
the  Member  States  in  2022  and,  where  applicable,  in  2023.  The  REPowerEU 
Regulation  introduces  a  new  category  of  non-repayable  financial  support,  made 
available  to  Member  States  to  finance  new  energy-related  reforms  and  investments 
under their recovery and resilience plans.  

On 8 March 2023, the Commission adopted a communication providing fiscal policy 
guidance for 2024. It aims to support the preparation of Member States’ stability and 
convergence  programmes  and  thereby  strengthening  policy  coordination7.  It  recalled 
that the general escape clause of the Stability and Growth Pact will be deactivated at 
the end of 2023. The Commission called for fiscal policies in 2023-2024 that ensure 
medium-term  debt  sustainability  as  well  as  raise  potential  growth  in  a  sustainable 
manner. Member States were invited to set out in their 2023 stability and convergence 
programmes  how  their  fiscal  plans  will  ensure  that  the  3%  of  GDP  deficit  reference 
value is adhered to as well as plausible and continuous debt reduction, or for debt to be 
kept at prudent levels in the medium term. The Commission invited Member States to 
phase out national fiscal measures introduced to protect households and firms from the 
energy  price  shock,  starting  with  the  least  targeted  ones.  It  indicated  that,  if  support 
measures needed to be extended because of renewed energy price pressures, Member 
States  should  target  such  measures  much  better  than  in  the  past  towards  vulnerable 
households  and  firms.  The  Commission  proposed  that  the  fiscal  recommendations 
would be quantified and differentiated and be formulated on the basis of net primary 
expenditure  as  proposed  in  its  Commission  Communication  on  orientations  for  a 
reform of the EU economic governance framework8. It recommended that all Member 
States  should  continue  to  protect  nationally  financed  investment  and  ensure  the 
effective use of the Recovery and Resilience Facility and other EU funds, in particular 
in light of the green and digital transition and resilience objectives. The Commission 
indicated  that  it  will  propose  to  the  Council  to  open  deficit-based  excessive  deficit 
procedures  in  spring  2024  on  the  basis  of  the  outturn  data  for  2023,  in  line  with 
existing legal provisions. 

On  26  April  2023,  the  Commission  presented  legislative  proposals  to  implement  a 
comprehensive  reform of the EU's economic  governance rules. The central  objective 
of the proposals is to strengthen public debt sustainability and promote sustainable and 
inclusive growth in all Member States through reforms and investment. The proposals 
aim at providing Member States with more control over the design of their medium-
term plans, while putting in place a more stringent enforcement regime to ensure that 

Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council  of  27  February  2023 
amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans 
and  amending  Regulations  (EU)  No  1303/2013,  (EU)  2021/1060  and  (EU)  2021/1755,  and  Directive 
2003/87/EC (OJ L 63, 28.2.2023, p. 1). 
COM(2023) 141 final. 
COM(2022) 583 final. 

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(9) 

Member  States  deliver  on  the  commitments  undertaken  in  their  medium-term  fiscal-
structural plans. The objective is to conclude the legislative work in 2023. 

On  3rd  May  2021,  Poland  submitted  its  national  recovery  and  resilience  plan  to  the 
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant 
to  Article  19  of  Regulation  (EU)  2021/241,  the  Commission  assessed  the  relevance, 
effectiveness,  efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in 
accordance with the assessment guidelines of Annex V to that Regulation. On 17 June 
2022,  the  Council  adopted  its  Decision  on  the  approval  of  the  assessment  of  the 
recovery and resilience plan for Poland9. The release of instalments is conditional on a 
decision  by  the  Commission,  taken  in  accordance  with  Article  24(5)  of  Regulation 
(EU)  2021/241,  that  Poland  has  satisfactorily  fulfilled  the  relevant  milestones  and 
targets  set  out  in  the  Council  Implementing  Decision.  Satisfactory  fulfilment 
presupposes  that  the  achievement  of  preceding  milestones  and  targets  has  not  been 
reversed. 

(10)  On  27  April  2023,  Poland  submitted  its  2023  National  Reform  Programme  and  its 
2023  Convergence  Programme,  in  line  with  Article  8(1)  of  Regulation  (EC)  No 
1466/97.  To  take  account  of  their  interlinkages,  the  two  programmes  have  been 
assessed  together.  In  accordance  with  Article  27  of  Regulation  (EU)  2021/241,  the 
2023  National  Reform  Programme  also  reflects  Poland’s  biannual  reporting  on  the 
progress made in achieving its recovery and resilience plan.  

in 

addressing 

(11)  The Commission published the 2023 country report for Poland10 on 24 May 2023. It 
assessed  Poland’s  progress 
country-specific 
recommendations  adopted by  the Council  between 2019  and  2022 and  took stock of 
Poland’s  implementation  of  the  recovery  and  resilience  plan.  Based  on  this  analysis, 
the  country  report  identified  gaps  with  respect  to  those  challenges  that  are  not 
addressed  or  only  partially  addressed  by  the  recovery  and  resilience  plan,  as  well  as 
new and emerging challenges. It also assessed Poland’s progress on implementing the 
European  Pillar  of  Social  Rights  and  on  achieving  the  EU  headline  targets  on 
employment, skills and poverty reduction, as well as progress in  achieving the UN’s 
Sustainable Development Goals.  

relevant 

the 

(12)  Based on data validated by Eurostat,11 Poland’s general government deficit increased 
from 1.8% of GDP in 2021 to 3.7% in 2022, while general government debt fell from 
53.6% of GDP at the end of 2021 to 49.1% at the end of 2022. On 24 May 2023, the 
Commission published a report under Article 126(3) TFEU;12 the report discussed the 
budgetary situation of Poland, as its general government deficit in 2022 exceeded the 
3% of GDP Treaty reference value. The report concluded that the deficit criterion was 
not fulfilled. In line with the Communication of 8 March 2023,13 the Commission did 
not  propose  to  open  new  excessive  deficit  procedures  in  spring  2023;  in  turn,  the 
Commission  stated  that  it  would  propose  to  the  Council  to  open  deficit-based 
excessive deficit procedures in spring 2024, on the basis of the outturn data for 2023. 

9 

10 
11 

12 

13 

Council Implementing Decision of 17 July 2022 on the approval of the assessment of the recovery and 
resilience plan for Poland (ST 9728/22; ST 9728/22 ADD 1). 
SWD(2023) 621 final. 
Eurostat-Euro Indicators, 47/2023, 21.4.2023. 

COM(2023) 631 final, 24.5.2023. 

COM(2023) 141 final, 8.3.2023. 

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Poland should take account of this in the execution of its 2023 budget and in preparing 
its budget for 2024. 

(13)  The  general  government  balance  has  been  impacted  by  the  fiscal  policy  measures 
adopted to mitigate the economic and social impact of the increase in energy prices. In 
2022,  such  revenue-decreasing  measures  included  the  reduced  VAT  rates  and  excise 
duties on energy and fuels; while such expenditure-increasing measures included cash 
subsidies  and  a  cap  on  electricity  prices  for  households  and  gas  cost  subsidies  to 
companies.  The  Commission  estimates  the  net  budgetary  cost  of  these  measures  at 
1.9% of GDP in 2022. The general government balance has also been impacted by the 
budgetary  cost  of  temporary  protection  to  displaced  persons  from  Ukraine,  which  is 
estimated at 0.5% of GDP in 2022. At the same time, the estimated cost of COVID-19 
temporary emergency measures dropped to 0.7% of GDP in 2022, from 2.4% in 2021. 
(14)  On 18 June 2021, the Council recommended that in 2022 Poland14 pursue a supportive 
fiscal  stance,  including  from  the  impulse  provided  by  the  Recovery  and  Resilience 
Facility, and preserve nationally financed investment. 

(15)  According to the Commission estimates, the fiscal stance15 in 2022 was supportive, at 
– 3.0%  of  GDP,  as  recommended  by  the  Council.  As  recommended  by  the  Council, 
Poland continued to support the recovery with investments financed by the Recovery 
and  Resilience  Facility.  Expenditure  financed  by  Recovery  and  Resilience  Facility 
grants and other EU funds amounted to 1.0% of GDP in 2022 (1.3% of GDP in 2021). 
Nationally  financed  investment  provided  an  expansionary  contribution  of  0.2 
percentage points to the fiscal stance.16 Poland therefore preserved nationally financed 
investment,  as  recommended  by  the  Council.  At  the  same  time,  the  growth  in 
nationally  financed  primary  current  expenditure  (net  of  new  revenue  measures) 
provided  an  expansionary  contribution  of  2.3  percentage  points  to  the  fiscal  stance. 
This significant expansionary contribution included the additional impact of measures 
to mitigate the economic and social impact of the increase in energy prices (additional 
net budgetary cost of 1.9% of GDP), as well as the costs to offer temporary protection 
to displaced persons from Ukraine (0.5% of GDP). Poland therefore sufficiently kept 
under control the growth in nationally financed current expenditure. 

(16)  The  macroeconomic  scenario  underpinning 

the 
Convergence Programme is realistic in 2023 and thereafter. The government projects 
real  GDP  to  grow  by  0.9%  in  2023  and  2.8%  in  2024.  By  comparison,  the 
Commission 2023 spring forecast projects a slightly lower real GDP growth of 0.7% 
in  2023  and  2.7%  in  2024,  mainly  due  to  lower  projected  contribution  of  domestic 
demand. 

the  budgetary  projections 

in 

(17) 

In  its  2023  Convergence  Programme,  the  government  expects  that  the  general 
government deficit will increase to 4.7% of GDP in 2023. The increase in 2023 mainly 

14 

15 

16 

Council  Recommendation  of  18  June  2021  delivering  a  Council  opinion  on  the  2021  Convergence 
Programme of Poland, OJ C 304, 29.7.2021, p. 98. 
The  fiscal  stance  is  measured  as  the  change  in  primary  expenditure  (net  of  discretionary  revenue 
measures), excluding Covid-19 crisis-related temporary emergency measures but including expenditure 
financed  by  non-repayable  support  (grants)  from  the  Recovery  and  Resilience  Facility  and  other  EU 
funds, 
in 
the Fiscal Statistical Tables.   

growth. For  more 

to  medium-term 

see  Box 1 

potential 

relative 

details 

Other nationally financed capital expenditure provided an expansionary contribution of 0.8 percentage 
points of GDP, largely reflecting government support to financial institutions. 

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reflects increased spending on defence, health, public sector wages and the indexation 
of pensions while costs of measures to mitigate the economic and social impact of the 
increase in energy prices are set to remain elevated. According to the Programme, the 
general government debt-to-GDP ratio is expected to increase from 49.1% at the end 
of 2022 to 50.5% at the end of 2023. The Commission 2023 spring forecast projects a 
government deficit of 5.0% of GDP for 2023. This is higher than the deficit projected 
in the Convergence Programme, mainly due to measures providing extraordinary aid 
to  farmers  which  were  not  yet  specified  in  the  Programme.  The  Commission  2023 
spring forecast projects a similar general government debt-to-GDP ratio, of 50.5% at 
the end of 2023. 

(18)  The  government  balance  in  2023  is  expected  to  continue  to  be  impacted  by  the 
measures adopted to mitigate the economic and social impact of the increase in energy 
prices.  They  consist  mainly  of  new  measures  such  as  price  freeze  schemes  for 
electricity and gas and subsidies to energy producers and energy-intensive industries. 
The  cost  of  these  measures  is  partly  offset  by  taxes  on  windfall  profits  of  energy 
suppliers, namely levies  on gas  and electricity producers. Taking these revenues into 
account,  the  net  budgetary  cost  of  the  support  measures  is  projected  in  the 
Commission 2023 spring forecast at 1.7% of GDP in 202317. Most measures in 2023 
do  not  appear  targeted  to  the  most  vulnerable  households  or  firms  and  they  do  not 
fully  preserve  the  price  signal  to  reduce  energy  demand  and  increase  energy 
efficiency.  As  a  result,  the  amount  of  targeted  support  measures,  to  be  taken  into 
account in the assessment of compliance with the fiscal recommendation for 2023, is 
estimated in the Commission 2023 spring forecast at 0.2% of GDP in 2023 (compared 
to  0.1%  of  GDP  in  2022).  The  budgetary  cost  of  temporary  protection  to  displaced 
persons  from  Ukraine  is  projected  to  decrease  by  0.2  percentage  points  of  GDP 
compared to 2022. Finally, the 2023 government balance is expected to benefit from 
the phasing out of COVID-19 temporary emergency measures of 0.7% of GDP. 
(19)  On  12  July  2022,  the  Council  recommended18  that  Poland  take  action  to  ensure  in 
2023 that the growth of nationally financed primary current expenditure is in line with 
an  overall  neutral  policy  stance19,  taking  into  account  continued  temporary  and 
targeted support to households and firms most vulnerable to energy price hikes and to 
people  fleeing  Ukraine.  Poland  should  stand  ready  to  adjust  current  spending  to  the 
evolving situation. Poland was also recommended to expand public investment for the 
green  and  digital  transitions,  and  for  energy  security  taking  into  account  the 
REPowerEU  initiative,  including  by  making  use  of  the  Recovery  and  Resilience 
Facility and other Union funds. 

(20) 

In  2023,  the  fiscal  stance  is  projected  in  the  Commission  2023  spring  forecast  to  be 
expansionary  (-  0.8%  of  GDP),  in  a  context  of  high  inflation.  This  follows  an 
expansionary fiscal stance in 2022 (- 3.0% of GDP). The growth in nationally financed 
primary  current  expenditure  (net  of  discretionary  revenue  measures)  in  2023  is 
projected  to  provide  an  expansionary  contribution  of  0.8  %  of  GDP  to  the  fiscal 

17 

18 

19 

The  figure represents the level of annual budgetary cost of those  measures, including current revenue 
and expenditure as well as – where relevant – capital expenditure measures. 
Council  Recommendation  of  12  July  2022  on  the  2022  National  Reform  Programme  of  Poland  and 
delivering a Council opinion on the 2022 Convergence Programme of Poland,  OJ C 334, 1.9.2022, p. 
171.  
Based  on  the  Commission  spring  2023  forecast,  the  medium-term  (10-year  average)  potential  output 
growth of Poland, which is used to measure the fiscal stance, is estimated at 15.5% in nominal terms. 

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stance. This includes the increased cost of the targeted support measures to households 
and firms most vulnerable to energy price hikes by 0.1% of GDP. This also includes 
lower costs to offer temporary protection to displaced persons from Ukraine (by 0.2% 
of  GDP).  The  expansionary  contribution  of  nationally  financed  net  primary  current 
expenditure is therefore not due to the targeted support to households and firms most 
vulnerable  to  energy  price  hikes  and  to  people  fleeing  Ukraine.  The  expansionary 
growth  in  nationally  financed  primary  current  expenditure  is  driven  by  untargeted 
energy  measures,  higher  spending  on  defence  and  health  as  well  as  permanent 
increases in public sector wages and social benefits.  In sum, the projected growth of 
nationally 
the 
recommendation  of  the  Council.  Expenditure  financed  by  Recovery  and  Resilience 
Facility grants and other EU funds is project to amount to 1.8% of GDP in 2023, while 
nationally financed investment is projected to provide a contractionary contribution to 
the  fiscal  stance  of  0.2  percentage  points.20  Therefore,  Poland  plans  to  finance 
additional  investment  through  the  Recovery  and  Resilience  Facility  and  other  EU 
funds,  and  it  is  not  projected  to  preserve  nationally  financed  investment.  It  plans  to 
finance public investment for the green and digital transitions, and for energy security, 
in the areas such as energy efficiency of buildings, onshore and offshore wind power, 
energy storage, modernisation of grids, hydrogen generation and sustainable mobility, 
which are funded by the Recovery and Resilience Facility and other EU funds. 

financed  primary  current  expenditure 

line  with 

is  not 

in 

(21)  According to the Convergence Programme the general government deficit is expected 
to  decline  to  3.4%  of  GDP  in  2024.  The  decrease  in  2024  mainly  reflects  the 
withdrawal  of  the  support  measures  related  to  the  energy  crisis.  The  programme 
expects the general government debt-to-GDP ratio to increase to 52.4% at the end of 
2024.  Based  on  policy  measures  known  at  the  cut-off  date  of  the  forecast,  the 
Commission  2023  spring  forecast  projects  a  government  deficit  of  3.7%  of  GDP  in 
2024.  This  is  higher  than  the  deficit  projected  in  the  programme,  mainly  due  to 
measures not  yet  specified in  the Programme. The Commission  2023 spring forecast 
projects a similar general government debt-to-GDP ratio, of 53.0% at the end of 2024.  

(22)  The Convergence Programme envisages the phasing out of most of the energy support 
measures  in  2024.  The  Commission  currently  assumes  net  cost  of  energy  support 
measures of 0.3% of GDP  in  2024.  This  hinges upon the assumption of no renewed 
energy price increases. Most of the energy support measures that are currently planned 
to  remain  in  place  in  2024  do  not  appear  targeted  to  vulnerable  households  or  firms 
and  do  not  fully  preserve  the  price  signal  to  reduce  energy  demand  and  increase 
energy efficiency. 

(23)  Council Regulation (EC) No 1466/97 calls for an annual improvement in the structural 
budget balance toward the medium-term objective by 0.5% of GDP as a benchmark.21 
Taking into account fiscal sustainability considerations,22 the need to reduce the deficit 

20 

21 

22 

Other nationally financed capital expenditure is projected to provide a contractionary contribution of 0.6 
percentage  points  of  GDP,  reflecting  the  withdrawal  effect  of  the  government  support  to  financial 
institutions in 2022. 

Cf. Article 5 of Council Regulation (EC) No 1466/97, which also requires an adjustment of  more than 
0.5%  of  GDP  for  Member  States  with  a  government  debt  exceeding  60%  of  GDP,  or  with  more 
pronounced debt sustainability risks. 
The Commission estimated that Poland would need an average annual increase in the structural primary 
balance as a share of GDP of  0.4 percentage points to achieve a plausible debt reduction or to ensure 
that  government  debt  is  kept  at  prudent  levels  in  the  medium  term.  This  estimate  was  based  on  the 

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to below the 3% of GDP reference value, an improvement in the structural  balance of 
at least 0.5% of GDP for 2024 would be appropriate. To ensure such an improvement, 
the growth in net nationally financed primary expenditure23 in 2024 should not exceed 
7.8%,  as  reflected  in  this  recommendation.  At  the  same  time,  the  remaining  energy 
support  measures  (currently  estimated  by  the  Commission  at  1.7%  of  GDP  in  2023) 
should be phased out, contingent on energy market developments and starting from the 
least targeted ones,  and the related savings should be used to  reduce the government 
deficit.  Based  on  Commission  estimates,  this  would  lead  to  a  growth  in  net  primary 
expenditure  below  the  recommended  maximum  growth  for  2024.  In  addition, 
according  to  the  Commission  2023  spring  forecast,  the  growth  in  net  nationally 
financed primary current expenditure in 2023 is not in line with the recommendation 
of the Council. If this is confirmed, lower growth in net primary expenditure in 2024 
would be appropriate. 

(24)  Assuming  unchanged  policies,  the  Commission  2023  spring  forecast  projects  net 
nationally financed primary expenditure to grow at 5.6% in 2024, which is below the 
recommended  growth  rate.    The  adjustment  projected  in  the  Commission  forecast  is 
slightly less than the savings from the full phasing out of energy support measures, as 
some of the energy support measures are projected to remain in force in 2024. 

(25)  According to the programme, government investment is expected to  remain stable at 
4.2% of GDP in 2024, similar level as in 2023. The programme refers to reforms and 
investments, that are expected to contribute to fiscal sustainability and sustainable and 
inclusive growth. These include reforms of the fiscal framework, which are also part 
of the Recovery and Resilience Plan. 

(26)  The  Convergence  Programme  outlines  a  medium-term  fiscal  path  until  2026. 
According to the programme, the general government deficit is expected to decline to 
2.9% of GDP in 2025 and remain at this level in 2026. The general government deficit 
is  therefore  planned  to  decrease  below  3%  of  GDP  in  2025.  According  to  the 
programme,  the  general  government  debt-to-GDP  ratio  is  expected  to  increase  from 
52.4% at the end of 2024 to 55.4% by the end of 2026. 

(27)  Considerable  scope  remains  to  increase  the  efficiency  of  public  spending  on  social 
benefits.  Social  benefits  remain  largely  untargeted  and  without  means  testing  at 
household level. Much of public spending is captured by high-income households, as 
the richest 20% of Poles receive the same share of public cash transfers as the poorest 
20%. Better targeting of benefits would lead to more efficient use of public resources 
in combatting poverty and supporting those most in need. 

(28)  The  rapidly  ageing  population  poses  challenges  for  the  Polish  pension  system.  The 
existing  pension  system  assumes  a  retirement  age  that  does  not  increase  even  as 
average  life  expectancy  and  years  spent  in  retirement  continue  to  rise.  The  current 
defined contribution pension system makes the system financially balanced but would 
lead  to  a  strong  drop  in  future  pension  benefits  in  relation  to  the  final  salary.  This 
would  mean  that  a  large  proportion  of  pensioners  would  be  at  risk  of  poverty. 
Commission analysis shows that merely to maintain the level of benefits close to the 
current  level,  Poland  would  need  to  spend  an  additional  6.7%  of  its  GDP  by  2070. 

23 

Commission autumn 2022 forecast. The starting point  for this estimate  was the projected government 
deficit and debt for 2024 which assumed the withdrawal of energy support measures in 2024.  
Net  primary  expenditure  is  defined  as  nationally  financed  expenditure  net  of  discretionary  revenues 
measures and excluding interest expenditure as well as cyclical unemployment expenditure. 

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(29) 

Recent changes in the general pension system and the costly special pension regimes 
have  made  pension  pay-outs  more  generous  to  current  pensioners.  This  has  reduced 
incentives  to  work  longer  than  the  relatively  low  retirement  age,  which  is  set  at  60 
years for women and 65 for men, and has increased ageing-related spending pressures.  

In accordance with Article 19(3), point (b) and  Annex V, criterion 2.2 of Regulation 
(EU) 2021/241, the recovery and resilience plan includes an extensive set of mutually 
reinforcing  reforms  and  investments  to  be  implemented  by  2026.  Due  to  its  late 
adoption  in  June  2022,  the  implementation  of  Poland’s  recovery  and  resilience  plan 
has  been  significantly  delayed.  Strengthening  the  independence  and  impartiality  of 
courts  and  remedying  the  situation  of  judges  affected  by  the  decisions  of  the 
Disciplinary  Chamber  of  the  Supreme  Court  in  disciplinary  cases  and  judicial 
immunity cases are a precondition for the Commission to disburse any payment to the 
country and ensure the protection of the financial interests of the Union, allowing for a 
swift  and  steady  implementation  of  the  plan.  Poland  has  started  to  implement  key 
measures  in  the  RRP,  among  which  reforms  in  the  areas  of  the  fiscal  framework, 
healthcare,  digital  transition,  energy  efficiency  and  labour  market.  Although  Poland 
has not  officially submitted  addenda to  the plan nor a  REPowerEU chapter, ongoing 
discussions with the Commission are taking place. In accordance with Article 14(6) of 
Regulation  (EU)  2021/241,  on  31  March  2023,  Poland  expressed  its  intention  to 
request EUR 23 billion of additional loan support under the Recovery and Resilience 
Facility.  The  swift  inclusion  of  the  new  REPowerEU  chapter  in  the  recovery  and 
resilience plan will allow additional reforms and investments to be financed in support 
of  Poland’s  strategic  objectives  in  the  field  of  energy  and  the  green  transition.  The 
systematic and effective involvement of local and regional authorities, social partners 
and other relevant stakeholders as well as the overall quality of social dialogue remain 
important  for  the  successful  implementation  of  the  recovery  and  resilience  plan,  as 
well  as  other  economic  and  employment  policies  going  beyond  the  plan,  to  ensure 
broad ownership of the overall policy agenda.  

(30)  The Commission approved all of Poland’s cohesion policy programming documents in 
2022. Proceeding with the swift implementation of the cohesion policy programmes in 
complementarity  and  synergy  with  the  recovery  and  resilience  plan,  including  the 
REPowerEU  chapter,  is  key  to  achieving  the  green  and  digital  transition,  increase 
economic and social resilience, as well achieving a balanced territorial development in 
Poland. 

(31)  Beyond the economic and social challenges addressed by the recovery and resilience 
plan, Poland faces a number of additional challenges related to the investment climate, 
energy policy and the green transition. 

(32)  The independence, efficiency and quality of the justice system are essential for a stable 
and predictable business environment as well as a friendly investment climate. These 
play an important role in achieving sustainable economic growth over the medium to 
long  term.  The  investment  climate  in  Poland  continues  to  be  impaired  by  serious 
concerns  related  to  the  rule  of  law,  including  the  independence  of  the  judiciary,  as 
identified in rulings by the Court of Justice of the European Union and the European 
Court of Human Rights. Furthermore, on 15 February 2023, the Commission referred 
Poland  to  the  Court  of  Justice  for  violations  of  EU  law  by  the  Polish  Constitutional 
Tribunal and its case law, violations that particularly challenge the primacy of EU law.      

(33)  Poland’s  energy  mix  is  heavily  dominated  by  fossil  fuels,  with  coal  accounting  for 
around 60% of it and renewable energy sources just 13% in 2021. Poland has stopped 

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importing natural gas from Russia since April 2022 and oil since February 2023. The 
impact  on  the  security  of  the  country’s  energy  supply  has  been  lessened  by  the 
diversification efforts of recent years. Poland has been decarbonising at a substantially 
lower  rate  than  other  EU  member  states.  Poland  still  has  ample  scope  to  address 
regulatory  and  administrative  barriers  to  accelerating  the  deployment  of  renewable 
energy  sources.  Increasing  energy  generation  from  renewable  sources  is  key  to 
decarbonising the Polish economy and to achieving climate neutrality. To unleash the 
potential  of  renewable  sources,  Poland  needs  to  improve  its  internal  networks  for 
energy transmission and distribution as well as those for energy storage, and reform its 
regulatory  environment.  In  particular,  Poland  should  implement  measures  to  remove 
barriers  to  the  permitting  process  for  renewable  energy  sources.  These  measures 
should focus on: (i) accelerating the inclusion of renewable energy sources in spatial 
plans;  (ii) setting up  renewables  go-to  areas;  (iii)  amending rules  on  grid connection 
permits;  and  (iv)  modernising  obsolete  and  inefficient  distribution  networks.  Further 
reforms are needed to: (i) enable industry to benefit from clean energy through long-
term contracts for power supply and demand, such as power purchase agreements; (ii) 
remove  restrictions  on  energy  communities;  and  (iii)  promote  the  deployment  of 
renewables in the district heating sector. 

(34)  Poland’s consumption of natural gas has dropped by 13% in the period August 2022 - 
March 2023, compared with the average gas consumption over the same period in the 
preceding  5  years,  slight  below  the  15%  reduction  target.  Poland  is  encouraged  to 
enhance  efforts  to  temporarily  reduce  gas  demand  until  31  March  202424.  Despite  a 
number of measures in place to contain energy demand, further efforts are needed to 
improve  energy  efficiency,  especially  for  residential  buildings  and  district  heating 
systems. Final energy consumption in Poland was 75.2 Mtoe in 2021, and has been on 
the rise throughout the last decade. More than half of the energy demand of residential 
buildings  for  heating  is  currently  satisfied  by  coal,  either  through  direct  use  or 
indirectly  in  district  heating.  However,  residential  buildings  remain  largely  energy 
inefficient,  contributing  to  higher  investment  needs  compared  to  other  EU  countries. 
Additionally,  the  district  heating  sector  requires  targeted  reforms  and  stepped-up 
investments  to  accelerate  its  decarbonisation,  increase  its  efficiency  and  ensure  its 
long-term financial viability. 

(35)  Between  2005  and  2021,  greenhouse  gas  emissions  from  domestic  transport  except 
aviation in Poland have grown by 88.3%, is in stark contrast to the decrease by 7.5% 
in the EU on average. Even with the additional measures included in Poland’s energy 
and climate plan, by 2030, greenhouse gas emissions from this sector are projected to 
be still 56% higher than in 2005. Building on the reforms and investments in Poland’s 
resilience and recovery plan, further effort is necessary to promote sustainable public 
transport  modes.  The  electrification  of  domestic  transport  needs  to  go  hand  in  hand 
with  the  decarbonisation  of  the  electricity  supply  to  reduce  sectoral  emissions 
effectively.  

(36)  Labour  and  skills  shortages  in  sectors  and  occupations  key  for  the  green  transition, 
including  manufacturing,  deployment  and  maintenance  of  net-zero  technologies  are 
creating  bottlenecks  in  the  transition  to  a  net-zero  economy.  High-quality  education 
and  training  systems  that  respond  to  changing  labour  market  needs  and  targeted 
upskilling and reskilling measures are key to reducing skills shortages and promoting 

24 

Council Regulation (EU) 2022/1369. Council Regulation (EU) 2023/706 

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labour inclusion and reallocation.  To unlock untapped labour supply, these measures 
need  to  be  accessible,  in  particular  for  individuals  and  in  sectors  and  regions  most 
affected  by  the  green  transition.  In  Poland,  in  the  context  of  the  green  transition, 
labour shortages in key sectors have increased in recent years, also linked to a lack of 
relevant skills, and are creating bottlenecks in the transition to a net-zero economy. In 
2022,  labour  shortages  were  reported  as  a  factor  that  constrained  production  in 
industry (63.4% of firms) and construction (74.6% of firms). 

(37) 

In  light  of  the  Commission’s  assessment,  the  Council  has  examined  the  2023 
Convergence Programme and its opinion25 is reflected in recommendation (1) below. 

HEREBY RECOMMENDS that Poland take action in 2023 and 2024 to:  

1. 

Wind  down  the  energy  support  measures  in  force  by  the  end  of  2023,  using  the 
related  savings  to  reduce  the  government  deficit.  Should  renewed  energy  price 
increases  necessitate  support  measures,  ensure  that  these  are  targeted  at  protecting 
vulnerable  households  and  firms,  fiscally  affordable,  and  preserve  incentives  for 
energy savings.  

Ensure  prudent  fiscal  policy,  in  particular  by  limiting  the  nominal  increase  in 
nationally financed net primary expenditure in 2024 to not more than 7.8%. 

Preserve nationally financed public investment and ensure the effective absorption of 
RRF  grants  and  other  EU  funds,  in  particular  to  foster  the  green  and  digital 
transitions.  

For  the  period  beyond  2024,  continue  to  pursue  a  medium-term  fiscal  strategy  of 
gradual  and  sustainable  consolidation,  combined  with  investments  and  reforms 
conducive  to  higher  sustainable  growth,  to  achieve  a  prudent  medium-term  fiscal 
position. 

Improve  the  efficiency  of  public  spending,  including  through  better  targeting  of 
social benefits. Ensure the adequacy of future pension benefits and the sustainability 
of the pension system by taking measures to increase the effective retirement age and 
reforming preferential pension schemes. 

Urgently  fulfil  the  required  milestones  and  targets  related  to  the  protection  of  the 
financial  interests  of  the  Union  with  a  view  to  allow  for  a  swift  and  steady 
implementation of its recovery and resilience plan. Swiftly finalise the REPowerEU 
chapter with a view to rapidly starting its implementation.  Proceed with the speedy 
implementation  of  cohesion  policy  programmes,  in  close  complementarity  and 
synergy with the recovery and resilience plan. 

2. 

3. 

Enhance the investment climate, including by safeguarding judicial independence.   

25 

Under Articles 5(2) and 9(2) of Council Regulation (EC) No 1466/97. 

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4. 

Accelerate  the  phase-out  of  fossil  fuels  and  the  deployment  of  renewable  energy.  
Reform the legal framework for grid connection permitting and for renewable energy 
sources,  including  energy  communities,  biomethane  and  renewable  hydrogen. 
Implement measures to promote energy savings and gas demand reductions. Scale up 
investment  in  energy  efficiency  for  buildings  and  decarbonise  the  heat  supply  in 
district  heating  to  address  energy  poverty.  Further  promote  sustainable  public 
transport modes.  Step up policy efforts aimed at the provision and acquisition of the 
skills needed for the green transition, including for building renovation. 

Done at Brussels, 

For the Council 
The President 

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