Poland Public Finance Review – Public Procurement: Saving and Greening

Fazekas, Mihaly; Ziolkowska, Barbara; and Regos, Nóra (2022) Public Procurement: Saving and Greening. In World Bank (2022) Poland Public Finance Review, World Bank, Washington DC. Chapter 4.

Poland’s public finance management was prudent in the years preceding the COVID-19 pandemic and facilitated a swift, substantial, and frontloaded policy response to the crisis. Poland built fiscal buffers in the years before the COVID-19 pandemic through spending containment and improved tax collections, aided by robust growth. This created the fiscal space needed to respond to the COVID-19 pandemic, which affected lives and livelihoods and triggered Poland’s first annual output contraction in 30 years. The fiscal deficit and debt level deteriorated markedly in the wake of the crisis. Even though the pace of fiscal adjustment is expected to ensure public debt sustainability, debt is projected to stabilize at a higher level than expected before the crisis commenced. Coming out of the crisis, Poland could make better use of public finances as a powerful tool to foster green, resilient, and inclusive development. Once the economic recovery is on a solid footing, revenue and expenditure measures will be needed to rebuild fiscal space. As part of this process, fiscal policy could be reoriented to better prioritize growth-enhancing investments and to support a just transition to a low-emission economy, which will require significant public and private resources. The fiscal, economic, and social costs of such a transition need to be weighed against the costs incurred in the business-as-usual scenario. Meanwhile, demographic changes are a source of fiscal pressure in the longer term and will likely strain the health care and pension systems, posing challenges for fiscal sustainability and inclusion.

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