Recommendation for a COUNCIL RECOMMENDATION endorsing the national medium-term fiscal-structural plan of Poland
Date: 2024-11-26
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Poland, budget deficit, coordination of EMU policies, economic reform, fiscal policy, investment, macroeconomics, national planning, public debt, structural adjustment

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   EUROPEAN COMMISSION  Strasbourg, 26.11.2024  COM(2024) 723 final  Recommendation for a COUNCIL RECOMMENDATION endorsing the national medium-term fiscal-structural plan of Poland  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

endorsing the national medium-term fiscal-structural plan of Poland 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 121 thereof, 

Having regard to Regulation (EU) 2024/1263, and in particular Article 17 thereof, 

Having regard to the recommendation from the Commission, 

Whereas: 

GENERAL CONSIDERATIONS 

(1) 

(2) 

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2 

3 

4 

A reformed EU economic governance framework entered into force on 30 April 2024. 
Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary 
surveillance,1  together  with  the  amended  Regulation  (EC)  No  1467/97  on  the 
implementation  of  the  excessive  deficit  procedure,2  and  the  amended  Council 
Directive  2011/85/EU  on  the  budgetary  frameworks  of  Member  States3  are  the  core 
elements of the reformed EU economic governance framework. The framework aims 
at  ensuring  public  debt  sustainability  and  sustainable  and  inclusive  growth  through 
reforms  and  investments.  It  promotes  national  ownership  and  has  a  medium-term 
focus, combined with an effective and coherent enforcement of the rules.  

The  national  medium-term  fiscal-structural  plans  that  Member  States  submit  to  the 
Council  and  to  the  Commission  are  at  the  centre  of  the  new  economic  governance 
framework. The plans are to deliver on two objectives: i) ensuring that, by the end of 
the adjustment period, general government debt is on a plausibly downward trajectory, 
or stays at  prudent  levels,  and that the government  deficit is  brought and maintained 
below the reference value of 3% of GDP over the medium-term, and ii) ensuring the 
delivery  of  reforms  and  investments  responding  to  the  main  challenges  identified  in 
the context of the European Semester and addressing the common priorities of the EU. 
To that end, each plan is to present a medium-term commitment to a net expenditure4 

(OJ 

1466/97 

Regulation 

(EC)  No 

Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  of  29  April  2024  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary  surveillance  and  repealing 
Council 
ELI: 
http://data.europa.eu/eli/reg/2024/1263/oj). 
Council  Regulation  (EU)  2024/1264  of  29  April  2024  amending  Regulation  (EC)  No  1467/97  on 
speeding  up  and  clarifying  the  implementation  of  the  excessive  deficit  procedure  (OJ  L,  2024/1264, 
30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1264/oj). 
Council Directive (EU) 2024/1265 of 29 April 2024 amending Directive 2011/85/EU on requirements 
for  budgetary 
(OJ  L,  2024/1265,  30.4.2024,  ELI: 
http://data.europa.eu/eli/dir/2024/1265/oj). 
Net expenditure as defined in Article 2 of Regulation (EU) 2024/1263, namely government expenditure 
net  of  (i)  interest  expenditure,  (ii)  discretionary  revenue  measures,  (iii)  expenditure  on  Union 

the  Member  States 

frameworks  of 

2024/1263, 

30.4.2024, 

L, 

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path, which effectively establishes a budgetary constraint for the duration of the plan, 
covering four or five years (depending on the regular term of legislature in a Member 
State).  In  addition,  the  plan  is  to  explain  how  the  Member  State  will  ensure  the 
delivery  of  reforms  and  investments  responding  to  the  main  challenges  identified  in 
the  context  of  the  European  Semester,  in  particular  in  the  country-specific 
recommendations  (including  those  pertaining  to  the  macroeconomic  imbalances 
procedure (MIP), if applicable), and how the Member State will address the common 
priorities of the Union. The period for fiscal adjustment covers a period of four years, 
which  may  be  extended  by  up  to  three  years  if  the  Member  State  commits  to 
delivering a set of relevant reforms and investments that satisfies the criteria set out in 
Regulation (EU) 2024/1263 

(3) 

(4) 

Following the submission of the plan, the Commission is to assess whether it complies 
with the requirements of Regulation (EU) 2024/1263. 

Upon  a  recommendation  from  the  Commission,  the  Council  is  to  then  adopt  a 
recommendation to set the net  expenditure path  of the Member State concerned and, 
investment  commitments 
the  set  of  reform  and 
where  applicable,  endorses 
underpinning an extension of the fiscal adjustment period. 

CONSIDERATIONS  CONCERNING  THE  NATIONAL  MEDIUM-TERM  FISCAL-
STRUCTURAL PLAN OF POLAND  

(5) 

On 9 October 2024, Poland submitted its national medium-term fiscal-structural plan 
to  the  Council  and  to  the  Commission.  The  submission  took  place  following  an 
extension  of  the  deadline  set  out  in  Article  36  of  Regulation  (EU)  2024/1263,  as 
agreed with the Commission in view of the reasons provided by Poland. 

Process prior to the submission of the plan  

(6) 

On  21  June  2024  the  Commission  sent,  according  to  Article  9  of  Regulation  (EU) 
2024/1263,  the  reference  trajectory5  to  Poland.  The  Commission  published  the 
reference  trajectory  on  9  October  20246.  The  reference  trajectory  is  risk-based  and 
ensures that, by the end of the fiscal  adjustment period and in the absence of further 
budgetary  measures  beyond  the  adjustment  period,  general  government  debt  is  on  a 
plausibly  downward  trajectory  or  stays  at  prudent  levels  over  the  medium  term,  and 
the  general  government  deficit  is  brought  below  3%  of  GDP  over  the  adjustment 

programmes fully matched by revenue from Union funds,  (iv) national expenditure on co-financing of 
programmes funded by the Union, (v) cyclical elements of unemployment benefit expenditure and (vi) 
one-offs and other temporary measures.  
Prior  guidance  transmitted  to  the  Member  States  and  Economic  and  Financial  Committee  includes 
trajectories  with  and  without  an  extension  of  the  adjustment  period  (covering  4  and  7  years, 
respectively).  It  also  includes  the  main  initial  conditions  and  underlying  assumptions  used  in  the 
Commission’s  medium-term  government  debt  projection  framework.  The  reference  trajectory  was 
calculated on the basis of the methodology described in the Commission’s Debt Sustainability Monitor 
2023  (https://economy-finance.ec.europa.eu/publications/debt-sustainability-monitor-2023_en).  It 
is 
based on the European Commission  Spring 2024 Forecast and its medium-term extension up to 2033, 
and  long-term  GDP  growth  and  ageing  costs  are  in  line  with  the  joint  Commission-Council  2024 
Ageing  Report  (https://economy-finance.ec.europa.eu/publications/2024-ageing-report-economic-and-
budgetary-projections-eu-member-states-2022-2070_en). 
https://economy-finance.ec.europa.eu/economic-and-fiscal-governance/national-medium-term-fiscal-
structural-plans_en#poland 

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period and maintained below that reference value over the medium term. The medium 
term  is  defined  as  the  ten-year  period  after  the  end  of  the  adjustment  period.  In 
accordance  with  Article  6,  point  (d),  7  and  8  of  Regulation  (EU)  2024/1263,  the 
reference  trajectory  is  also  consistent  with  the  deficit  benchmark,  the  debt 
sustainability safeguard and the deficit resilience safeguard. The reference trajectory of 
Poland sets out that, based on the Commission’s assumptions and assuming a 4-year 
adjustment period, net expenditure should not grow by more than the values provided 
in  Table  1.  This  corresponds  to  average  net  expenditure  growth  of  4.5%  over  the 
adjustment period (2025-2028).  

Table 1: Reference trajectory provided by the Commission to Poland on  
21 June 2024 

Maximum net 
expenditure growth 
(annual, %) 

2025 

2026 

2027 

2028 

Average 
2025-2028 

5.3 

4.6 

4.2 

3.9 

4.5 

Source: Commission’s calculations. 

(7) 

(8) 

In  line  with  Article  12  of  Regulation  (EU)  2024/1263,  Poland  and  the  Commission 
engaged in  a technical dialogue from July to October 2024. The dialogue centred on 
the  net  expenditure  path  envisaged  by  Poland  and  its  underlying  assumptions  (in 
particular  potential  output,  interest  rates,  GDP  deflator  and  fiscal  multipliers), 
deviation  from  the  no-backloading  safeguard,  as  well  as  the  envisaged  delivery  of 
reforms and investments responding to the main challenges identified in the context of 
the  European  Semester  and  the  common  priorities  of  the  Union  in  fair  and  green 
digital transition, social and economic resilience, energy security and the build-up of 
defence capabilities. 

According  to  the  information  provided  by  Poland  in  its  plan,  a  consultation  process 
with  relevant  national  stakeholders  (including  social  partners)  prior  to  submission  as 
foreseen in Article 11(3) of Regulation (EU) 2024/1263 did not take place, in line with 
the  transitional  provisions  foreseen  in  Article  36(1),  point  (c),  of  Regulation  (EU) 
2024/1263. At the same time, according to the information provided by Poland in its 
plan,  in  September  2024,  Poland  engaged  in  a  discussion  regarding  the  proposed 
reforms  and  investments  with  civil  society  representatives  and  social  partners  in  the 
framework of the national “European Semester Group”. 

Other related processes 

(9) 

to  non-compliance  with 

On  26  July  2024,  the  Council  established  the  existence  of  an  excessive  deficit  in 
the  deficit  criterion7.  The  present 
Poland  due 
Recommendation  coincides  with  the  Council  Recommendation  under  Article  126(7) 
TFEU  with  a  view  to  bringing  an  end  to  the  situation  of  an  excessive  government 
deficit  in  Poland8.  The  simultaneous  adoption  of  those  recommendations,  which  is 

7 
8 

https://eur-lex.europa.eu/eli/dec/2024/2133/oj 
Recommendation for a Council Recommendation with a view to bringing an end to the situation of an 
excessive deficit in Poland, 26.11.2024, COM(2024)956 final. 

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tailored to and justified by the transition to the new economic governance framework, 
ensures consistency between the recommended adjustment paths.  

(10)  On  21  October  2024,  the  Council  addressed  to  Poland  a  series  of  country-specific 

recommendations (CSRs) in the context of the European Semester9. 

SUMMARY OF THE PLAN AND THE COMMISSION’S ASSESSMENT THEREOF 

(11) 

In  line  with  Article  16  of  Regulation  (EU)  2024/1263,  the  Commission  assessed  the 
plan as follows: 

Context: macroeconomic and fiscal situation and outlook 

investment,  while 

(12)  Economic  activity  in  Poland  grew  by  0.1%  in  2023,  due  to  positive  net  exports  and 
buoyant 
inventories  and  private  consumption  contributed 
negatively.  According  to  the  European  Commission  Autumn  2024  Forecast,  the 
economy  is  expected  to  grow  by  3.0%  in  2024,  on  the  back  of  robust  private  and 
public consumption as  well as a positive contribution from investment.  In 2025, real 
GDP  is  set  to  increase  by  3.6%,  as  growth  of  consumption  remains  strong,  and 
investment  accelerates.  In  2026,  real  GDP  is  expected  to  increase  by  3.1%,  with 
positive  contributions  from  private  and  public  consumption  as  well  as  investment. 
Over  the  forecast  horizon  (i.e.,  2024-2026),  potential  GDP  in  Poland  is  expected  to 
grow by slightly below 3%, which is weaker than in previous years, driven by a lower 
labour contribution. The unemployment rate stood at 2.8% in 2023 and is projected by 
the Commission to amount to 2.9% in 2024, 2.8% in 2025 and 2.7% in 2026. Inflation 
(GDP deflator) is projected to decrease from 9.5% in 2023 to 3.9% in 2024 and reach 
4.6% in 2025 and 3.0% in 2026.  

(13)  Regarding  fiscal  developments,  in  2023  Poland’s  general  government  deficit 
amounted  to  5.3%  of  GDP.  According  to  the  European  Commission  Autumn  2024 
Forecast,  it  is  set  to  reach  5.8%  of  GDP  in  2024  and  to  decline  to  5.6%  of  GDP  in 
2025 and, on a no-policy change basis, to  5.3% in 2026. The European  Commission 
Autumn  2024  Forecast  includes  Poland’s  draft  budget  for  2025  that  the  government 
proposed  to  the  national  parliament  in  September.  General  government  debt  was 
49.7%  of  GDP  at  end-2023.  According  to  the  European  Commission  Autumn  2024 
Forecast,  the  debt  ratio  is  expected  to  increase  to  54.7%  of  GDP  at  end-2024.  It  is 
projected to increase to 58.9% of GDP at end-2025 and 62.4% at end-2026. The fiscal 
forecast by the Commission does not consider the policy commitments in the medium-
term plans as such until they are underpinned by credibly announced and sufficiently 
specified concrete policy measures. 

Net expenditure path and main macroeconomic assumptions in the plan  

(14)  Poland’s national medium-term fiscal-structural plan covers the period 2025-2028 and 

presents a fiscal adjustment over four years.  

(15)  The  plan  contains  all  information  required  by  Article  13  of  Regulation  (EU) 

2024/1263.  

9 

Council Recommendation on economic, budgetary, employment and structural policies of Poland, not 
yet published. 

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(16)  The  plan commits  to the net  expenditure path  indicated in  Table  2, corresponding to 
average  net  expenditure  growth  of  4.5%  over  the  years  2025-2028.  The  average  net 
expenditure  growth  reported  in  the  plan  over  the  adjustment  period  (2025-2028)  is 
broadly  in  line  with10  the  average  net  expenditure  growth  in  the  reference  trajectory 
transmitted  by  the  Commission  on  21 June  2024.  The  plan  assumes  potential  GDP 
growth to decrease from 3.2% in 2024 and 3.3% in 2025 to 1.6% in 2028. In addition, 
the plan expects the growth rate of the GDP deflator to increase from 3.6% in 2024 to 
5.0% in 2025, and then to gradually decrease to 4.7% in 2026, 4.3% in 2027 and 4.0% 
in 2028. 

 Table 2: Net expenditure path and main assumptions in Poland’s plan  

Net expenditure growth 
 (annual, %) 
Net expenditure growth 
 (cumulative, from base 
year 2023, %) 
Potential GDP growth (%) 

Inflation (GDP deflator 
growth) (%) 

2024 

2025 

2026 

2027 

2028 

12.5 

6.3 

4.4 

4.0 

3.5 

12.5 

19.6 

24.9 

29.9 

34.4 

3.2 

3.6 

3.3 

5.0 

2.0 

4.7 

1.7 

4.3 

1.6 

4.0 

Average over the 
period of validity of 
the plan 2025-2028 

4.5 

n.a.  

2.2 

4.5 

Source: Medium-term fiscal-structural plan of Poland and Commission calculations. 

Implications of the plan’s net expenditure commitments for general government debt  

(17) 

If the net  expenditure path  committed to  in  the plan and the underlying assumptions 
materialise,  general  government  debt  would,  according  to  the  plan,  increase  from 
54.6% in 2024 to 61.3% of GDP in 2027 and decrease to 61.2% of GDP at the end of 
the adjustment period (2028), as per the following table. After the adjustment, over the 
medium  term  (i.e.  until  2038),  the  debt  ratio  is  expected  to  continue  to  decrease 
according to the plan, to 52.8% of GDP by 2038. Thus, according to the plan, general 
government debt would be brought below the Treaty reference value of 60% of GDP 
over  the  medium  term.  This  is  plausible  based  on  the  plan’s  assumptions,  as  debt  is 
projected to stand below 60% of GDP by 2038 under all deterministic stress tests of 
the Commission’s Debt Sustainability Analysis. Therefore, based on the plan’s policy 
commitments and macroeconomic assumptions, the net expenditure path  put forward 
in the plan is consistent with the requirement for debt as set out in Articles 6, point (a), 
and 16(2) of Regulation (EU) 2024/1263.  

Table 3: General government debt and balance developments in Poland’s plan 

Government debt 
(% of GDP) 

2023 

49.6 

2024 

54.6 

2025 

58.4 

2026 

60.9 

2027 

61.3 

2028 

61.2 

2038 

52.8 

10 

The difference is not visible due to rounding. 

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Government balance 
(% of GDP) 

-5.1 

-5.7 

-5.5 

-4.5 

-3.7 

-2.9 

-2.0 

Source: Medium-term fiscal-structural plan of Poland.  

Implications  of  the  plan’s  net  expenditure  commitments  for  the  general  government 
balance 

(18)  Based  on  the  plan’s  net  expenditure  path  and  assumptions,  the  general  government 
deficit would gradually decline from 5.7% of GDP in 2024 to 2.9% of GDP in 2028. 
Thus, according to the plan, the general government balance would not exceed the 3% 
of GDP reference value at the end of the adjustment period (2028). In addition, in the 
ten  years  following  the  adjustment  period  (i.e.  until  2038),  the  government  deficit 
would not exceed 3% of GDP. Therefore, based on the plan’s policy commitments and 
macroeconomic  assumptions,  the  net  expenditure  path  put  forward  in  the  plan  is 
consistent  with  the requirement for the deficit as set  out  in  Articles 6, point  (b),  and 
16(2) of Regulation (EU) 2024/1263. 

Time profile of the fiscal adjustment  

(19)  The  time  profile  of  the  fiscal  adjustment,  measured  as  the  change  in  the  structural 
primary  balance,  as  described  in  the  plan,  is  backloaded  from  2025  to  2026-2028 
compared  to  the  linear  path  referred  to  as  a  rule  under  Article  6,  point  (c),  of 
Regulation  (EU)  2024/1263.  According  to  the  plan,  this  deviation  from  the  no-
backloading  safeguard  is  justified  under  the  transitional  provision  in  Article  36(1), 
point  (e)  of  Regulation  (EU)  2024/1263  by  the  higher  expenditure  financed  by  RRF 
loans  and  co-financing  of  EU  funds  in  2025  (estimated  to  increase  by  0.16%  and 
0.03% of GDP respectively), as well as by the increase in defence investment in 2025 
(planned  to  increase  by  0.25%  of  GDP).  Therefore,  based  on  the  plan’s  policy 
commitments and macroeconomic assumptions, the net expenditure path  put forward 
in the plan is consistent with the no-backloading safeguard clause set out in Article 6, 
point (c), and the transitional provision in Article 36(1), point (e), of Regulation (EU) 
2024/1263.  

Table 4: Structural primary balance developments in Poland’s plan  

Structural 
primary balance 
(% of GDP) 
Change in 
structural 
primary balance 
(pps.) 

2023 

-2.5 

2024 

-2.9 

2025 

-2.6 

2026 

-1.5 

2027 

-0.5 

2028 

0.4 

n.a. 

-0.4 

0.3 

1.1 

1.0 

1.0 

Source: Medium-term fiscal-structural plan of Poland. 

Consistency of the plan with the excessive deficit procedure  

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(20)  The net expenditure path set out in the plan is in line with the requirements under the 
excessive  deficit  procedure  (in  particular  with  the  minimum  annual  structural 
adjustment established in Article 3(4), third subparagraph of Council Regulation (EC) 
1467/97,  after  considering  the  planned  increase  in  defence  investment  as  a  relevant 
factor). 

Consistency of the plan with the deficit resilience safeguard 

(21)  The  requirement  of  the  preventive  arm  set  out  in  Article  8  of  Regulation  (EU) 
2024/1263 regarding the deficit resilience safeguard, which aims to provide a common 
margin relative to the deficit reference value of 3% of GDP, does not apply to Poland 
as the deficit is planned to be brought below 3% of GDP only in the last year of the 
adjustment period.   

Consistency of the plan with the debt sustainability safeguard 

(22)  According  to  the  plan,  general  government  debt  will  be  between  60%  and  90%  of 
GDP in 2026-2028. However, as according to the plan the government deficit would 
go  below  3%  of  GDP  in  2028,  which  would  result  in  an  abrogation  of  the  decision 
establishing  the  existence  of  an  excessive  deficit  in  the  year  after  the  end  of  the 
adjustment period, the debt sustainability safeguard does not apply during the period 
covered by the plan.  

Macroeconomic assumptions of the plan 

(23)  The  plan  is  based  on  a  set  of  assumptions  which  differ  from  the  Commission’s 
assumptions  transmitted  to  Poland  on  21  June  2024.  In  particular,  the  plan  uses 
different  assumptions  for  nine  variables,  namely  the  starting  point  (general 
government  balance  in  2024),  potential  GDP  growth,  the  GDP  deflator  in  2024  and 
2025,  real  GDP  growth  in  2024  and  2025,  interest  rates,  debt  structure,  fiscal 
multiplier,  stock-flow  adjustments,  and  it  includes  a  back-loaded  adjustment  profile. 
An assessment of these differences is provided below. The differences in assumptions 
with the most significant impact on average net expenditure growth are listed below, 
together with an assessment of each difference in assumptions considered in isolation. 

• 

• 

The  plan  assumes  a  worse  initial  position  compared  to  the  Commission’s 
assumption.  The  structural  primary  balance  was  -2.6%  of  GDP  in  the  prior 
guidance  and  is  -2.9%  of  GDP  in  the  plan.  The  lower  structural  primary 
balance  in  the  plan  reflects  a  worse  budgetary  outcome  in  the  first  three 
quarters  of  2024  due  to  a  lower  revenue  outturn  than  expected,  in  particular 
from VAT and corporate income tax, as well as higher spending than expected. 
Consequently, this assumption is deemed to be duly justified and contributes to 
a lower average net expenditure growth over the adjustment period in the plan 
than according to the Commission’s assumptions.  

The plan assumes the GDP deflator to reach 3.6% in 2024, 5.0% in 2025, 4.7% 
in  2026, 4.3% in  2027, and 4.0% in  2028. This  contributes to  higher average 
net expenditure growth over the adjustment period in the plan than according to 
the  Commission’s  assumptions.  In  the  prior  guidance,  the  Commission 
projected  a  GDP  deflator  of  4.5%  in  2024  and  4.2%  in  2025.  The  difference 
between the plan and the prior guidance reflects the revised timeline for the full 

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• 

• 

phase-out of energy support measures, which was previously assumed to occur 
in  July  2024,  but  is  delayed  to  January  2025  according  to  the  existing  Polish 
legislation  as  explained  in  the  plan  and  also  in  line  with  the  Commission 
Autumn  2024  forecast.  GDP  deflator  growth  projections  for  the  remaining 
years  of  the  plan  are  slightly  below  what  the  medium-term  convergence  rule 
from the higher starting value for 2025 would imply. Overall, this assumption 
is deemed to be duly justified.  

The plan assumes nominal implicit interest rates to reach 4.9% in 2024, 5.2% 
in  2025,  4.6%  in  2026,  4.5%  in  2027,  and  4.4%  in  2028.  This  contributes  to 
higher average net  expenditure growth  over the adjustment period in the plan 
than  according  to  the  Commission’s  assumptions.  The  Commission’s  prior 
guidance  assumed  nominal  implicit  interest  rates  of  4.8%  in  2024,  4.8%  in 
2025, 5.1% in 2026, 5.2% in 2027, and 5.4% in 2028. The plan's lower implicit 
nominal interest rates reflect lower market interest rates, a higher share of debt 
with short-term market interest rates to reflect the significant amount of long-
term debt issued with variable interest rates, an expected easing of central bank 
policy  rates  from  2025  and  the  very  short  maturity  of  Polish  public  debt. 
Overall,  the  plan’s  assumption  is  deemed  to  be  duly  justified  by  the  use  of 
more  recent  market  data,  a  more  granular  debt  decomposition  and  country 
specific factors relevant for debt projections.  

As mentioned above, the plan assumes a time profile of the fiscal adjustment, 
measured  as  the  change  in  structural  primary  balance,  that  is  backloaded  to 
2026-2028. This contributes to lower average net expenditure growth over the 
adjustment period in the plan than according to the Commission’s assumptions. 
This difference is driven by the reasons listed in recital 19. At the same time, 
the  net  expenditure  growth  rate  in  2025  to  which  Poland  commits  implies  a 
larger improvement in the structural primary balance in 2025 than indicated in 
the  plan  based  on  the  Commission  medium-term  government  debt  projection 
framework. Consequently, this assumption is deemed to be duly justified. 

On balance, the impact of the assumptions that are duly justified neutralises the impact 
of the worse initial fiscal position on average net expenditure growth.  The remaining 
differences  in  assumptions,  while  not  always  consistent  with  the  common  DSA 
framework,  do  not  have  a  significant  impact  on  average  net  expenditure  growth 
compared to the Commission’s assumptions. The Commission will take into account 
the  above  assessment  of  the  plan’s  assumptions in  future  assessments  of  compliance 
with the net expenditure path.  

Fiscal strategy in the plan 

(24)  According  to  the  indicative  fiscal  strategy  in  the  plan,  the  commitments  on  net 
expenditure  will  be  delivered  through  both  expenditure  restraint  and  discretionary 
revenue  increases.  The  planned  fiscal  consolidation  in  2025  is  based  on  the  planned 
expenditures  and  revenues  included  in  the  2025  draft  budget.  It  includes  the  fiscal 
impact of fixed personal income tax thresholds, increases of excise duties, cancellation 
of  the  lower  VAT  rate  on  food,  withdrawal  of  energy  support  measures  that  were 
extended until the end of 2024 and freezing the nominal value of some social benefits 
(including  Family  800  Plus  and  Active  Parent  programmes).  In  the  following  three 
years  of  the  plan,  the  fiscal  consolidation  is  to  be  achieved  by  measures  on  both 
revenue and expenditure side, with about equal contributions from each side. In 2026-

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2028,  the  main  revenue  measures  include  continuation  of  freezing  of  nominal 
thresholds  for  personal  income  tax  and  an  increase  of  excise  duties  on  alcohol  and 
tobacco. On the expenditure side, the main measures are limiting of nominal levels of 
the government’s intermediate consumption and of social security benefits excluding 
pensions. The specification of the policy measures to be adopted is to be confirmed or 
adjusted and quantified in the annual budgets. At the same time, there are risks to the 
implementation of the indicative fiscal strategy in the plan, which stem from risks to 
the  macroeconomic  assumptions  underpinning  the  plan  and  the  increasing  spending 
needs  on  defence,  which  may  imply  restraint  in  other  net  expenditure  items.  The 
budget  that  the  government  tabled  in  the  national  parliament  in  September  2024  for 
2025 specifies the policy measures through which the net expenditure commitment for 
2025 will be achieved. 

Reform  and  investment  intentions  in  the  plan  responding  to  the  main  challenges 
identified in the context of the European Semester and addressing the common priorities 
of the Union 

(25)  The plan describes policy intentions concerning reforms and investments to respond to 
the main challenges identified in the context of the European Semester, especially the 
CSRs,  and  to  address  the  common  priorities  of  the  EU.  The  plan  includes  fourteen 
reforms and investments addressing the common priorities of the EU, of which eleven 
are  financially  supported  by  the  Recovery  and  Resilience  Facility  and  six  by  the 
cohesion policy funds. 

(26)  Concerning  the  common  priority  of  a  fair  green  and  digital  transition,  including  the 
climate  objectives  set  out  in  Regulation  (EU)  2021/1119,  the  plan  includes 
investments in high-speed internet, robotisation and digitalisation of businesses, digital 
transformation  of  businesses  through  the  use  of  cloud  computing  as  well  as  reforms 
concerning  green  transformation  in  urban  areas  and  quality  of  water  for  human 
consumption  and  investment  in  sustainable  use  of  water  resources.  Those  measures 
intend  to  address  the  challenges  identified  by  the  CSRs,  notably  those  referring  to 
digitalisation of businesses (recommended in 2024 and 2022), innovations (2022 and 
2019) as well as water resources (2024). The measures selected by Poland in the plan 
do  not  respond  to  the  CSRs  related  to  green  skills  (2023),  digital  skills  (2022  and 
2020),  adult  learning  (2022),  private  investments  (2020)  as  well  as  digitalisation  of 
public administration (2022).  

(27)  Concerning  the  common  priority  of  social  and  economic  resilience,  including  the 
European Pillar of Social Rights, the plan includes a reform that is expected to foster 
innovation  and  competitiveness  of  the  economy  by  stronger  protection  of  industrial 
property,  measures  enhancing  access  to  public  procurement  for  small  and  medium-
sized  businesses  as  well  as  a  reform  of  the  long-term  care  system.  Those  measures 
intend  to  address  the  challenges  identified  by  the  CSRs,  notably  those  referring  to 
long-term care (recommended in 2024, 2022 and 2019) as well as public procurement 
(2024).  The  measures  selected  by  Poland  in  the  plan  do  not  respond  to  the  CSRs 
related  to  improving  the  efficiency  of  public  spending  (2024,  2023,  2022,  2020  and 
2019),  better  targeting  of  social  benefits  (2024,  2023,  2022  and  2020),  ensuring  the 
future adequacy and sustainability of the pension system (2024, 2023, 2022 and 2019), 
improving  the  resilience,  accessibility  and  effectiveness  of  the  health  system  (2022, 
2020 and 2019), improving public consultations and the involvement of social partners 
(2022,  2020  and  2019),  ensuring  quality  and  inclusive  education  (2022  and  2019), 

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removing  obstacles  to  more  permanent  types  of  employment,  including  subjecting 
civil  law  contracts  to  social  security  contribution  (2022  and  2019),  labour  market 
participation of underrepresented groups (2024, 2022 and 2019) as well as improving 
access to childcare (2022 and 2019).  

(28)  Concerning the common priority of energy security, the plan includes a wind energy 
reform  as  well  as  investments  in  offshore  wind  farms,  energy  storage  systems, 
hydrogen  technologies,  energy  infrastructure  as  well  as  energy  efficiency  and 
renewable energy support measures. Those measures intend to address the challenges 
identified  by  the  CSRs,  notably  those  referring  to  district  heating  (recommended  in 
2024),  renewable  energy  and  energy  efficiency  (2023  and  2022)  and  energy 
infrastructure (2019). The measures selected by Poland in the plan do not  respond to 
the CSRs related to sustainable transport (2023, 2022, 2020 and 2019). 

(29)  Concerning the common priority of defence capabilities, the plan includes information 
on  investments  in  strengthening  Poland’s  defence  capacity,  presented  in  the  EU  and 
the NATO context. Spending on defence is set to increase from 2.6% of GDP in 2024 
to  2.8%  of  GDP  in  2025,  including  0.25  pps.  increase  in  military  investments  (from 
0.7%  of  GDP  to  0.9%  GDP,  respectively).  In  the  following  years  of  the  adjustment 
period, spending on defence is set to amount to at least 3% of GDP (in cash terms) as 
required by national law.   

(30)  The  plan  provides 

information  on 

the  consistency  and,  where  appropriate, 
complementarity with the cohesion policy funds and Poland’s recovery and resilience 
plan (RRP). The dominant part of the measures included in the plan is financed by the 
RRP  funds.  The  measures  which  do  not  concern  the  RRP  are  those  related  to 
protecting  industrial  property,  enhancing  public  procurement  and  water  for  human 
consumption.  Six  measures  additionally  benefit  from  the  funding  of  the  cohesion 
policy funds. 

(31)  The plan provides an overview of the public investment needs of Poland related to the 
common  priorities  of  the  EU.  Regarding  fair  green  and  digital  transition  as  well  as 
energy security, the plan evokes findings of ‘The future of European competitiveness’ 
report11,  emphasising  the  need  for  investments  to  lower  energy  prices,  including 
through  the  RRP  investments  in  producing  and  storing  renewable  hydrogen  and 
building wind farms, as well as the need to improve digital skills and access to high-
speed internet. Regarding social and economic resilience, the plan emphasises the need 
to  achieve  greater  economic  independence,  including  by  ensuring  the  security  of  the 
supply chains of key critical raw materials and semiconductors. The plan also explains 
that for some public policies, including energy, health, social and education policy, a 
review of reforms and investments is underway limiting the scope for a more precise 
assessment  of  investment  needs  until  2028.  Regarding  the  build-up  of  defence 
capabilities, the plan includes an increase in defence spending beyond 2% of GDP, in 
alignment  with  NATO  commitments.  The  plan  also  refers  to  the  changing  external 
conditions,  including  Russia’s  war  of  aggression,  and  the  EU’s  emerging  strategic 
priorities and resulting investment needs.  

Conclusion of the Commission’s assessment 

11 

Draghi, M., ‘The future of European competitiveness’, European Commission, September 2024. 

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(32)  Overall, the Commission is of the view that Poland’s plan fulfils the requirements of 

Regulation (EU) 2024/1263.   

OVERALL CONCLUSION 

(33) 

In accordance with Article 17 of Regulation (EU) 2024/1263, the net expenditure path 
as set in the plan should be recommended by the Council to Poland. 

HEREBY RECOMMENDS that Poland: 

1. 

Ensure that net expenditure growth does not exceed the maxima established in Annex 
I to this Recommendation.  

In  addition,  the  Council  invites  Poland  to  ensure  the  delivery  of  reforms  and  investments 
responding  to  the  main  challenges  identified  in  the  context  of  the  European  Semester,  in 
particular in the country-specific recommendations, and addressing the common priorities of 
the Union.  

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ANNEX I 

Maximum growth rates of net expenditure 
(annual and cumulative growth rates, in nominal terms) 

Poland 

Years 

Growth rates 
(%) 

Annual 
Cumulative (*) 

2025 
6.3 
19.6 

2026 
4.4 
24.9 

2027 
4.0 
29.9 

2028 
3.5 
34.4 

(*) The cumulative growth rates are calculated by reference to the base year of 2023. 

Done at Strasbourg, 

For the Council 
The President 

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