This article is a part of Poland Unpacked. Weekly intelligence for decision-makers
Interactive chart Debt...
The milestone was widely expected, but it is nonetheless symbolic.
Crossing the EU threshold carries no immediate consequences. Under the bloc’s reformed fiscal framework, the only operational benchmark is the growth of net expenditure, as set out in Poland’s 2025–2028 medium-term fiscal-structural plan. That limit has since been temporarily relaxed to accommodate higher defense spending. However, the debt level will matter when determining how much Poland will need to tighten its public finances under the next fiscal plan.
Poland’s domestic definition of public debt differs from the methodology used by the EU. As a result, the country’s state public debt, as measured under national rules, remains lower. According to the latest debt management strategy, the domestic precautionary threshold of 55% of GDP is not expected to be breached until 2028, which would have implications for the 2030 budget. Updated projections are due this fall.
At the same time, it is worth noting that a number of EU member states have debt levels that are similar to – or considerably higher than – Poland’s. This includes not only countries such as Spain (102% of GDP) and France (118% of GDP), but also Hungary, Slovenia, Slovakia, and Romania.
A recent study by the International Monetary Fund, at least as I interpret it, suggests that Poland remains well below any dangerous level of indebtedness. The study estimates the average threshold at around 120% of GDP for advanced economies and 60% of GDP for emerging markets. Poland lies somewhere between those two groups – and may now be closer to the former than the latter.
...and the deficit
For that reason, I consider the budget deficit to be the more important indicator. In the first quarter of 2026, Poland’s seasonally adjusted general government deficit stood at 5.9% of GDP, the third-highest in the European Union, behind only Bulgaria and Hungary.
Interactive chart Even so, the data point to some fiscal consolidation, both quarter on quarter and year on year. The deficit amounted to 7.8% of GDP in the fourth quarter of 2025 and 6.7% of GDP a year earlier. The year-over-year comparison for all EU countries is shown in the chart below. The coming quarters will reveal whether Poland’s improvement was a one-off jump or the beginning of a lasting trend.
Interactive chart The chart also highlights the scale of Romania’s fiscal tightening over the past year. It is no coincidence that the country’s GDP contracted by 1.1% year on year in the first quarter. Germany, meanwhile, is moving in the opposite direction, with fiscal expansion gathering pace. Its deficit widened by 0.6 percentage points of GDP quarter on quarter and by 1.5 percentage points of GDP compared with a year earlier.
The largest fiscal loosening, however, took place in Bulgaria and Hungary. In Hungary’s case, the wider deficit reflects the expansionary fiscal measures introduced in late 2025 and early 2026, including higher social transfers, tax cuts, and additional election-related spending.
Why do I believe the deficit matters more than the debt level for Poland at this stage? Once the defense-related escape clause expires, the EU’s fiscal rules will require substantial fiscal consolidation. Poland should avoid finding itself in Romania’s position. The greater the fiscal tightening undertaken now – provided it remains measured and sustainable – the less severe the adjustment will need to be once the temporary relaxation of the rules comes to an end. That, in turn, would reduce the negative impact on the Polish economy.