IMF Urges Poland To Cut Spending To Pave Way For Interest-Rate Cuts As Budget Deficits Exceed 5%

The International Monetary Fund (IMF) has cautioned Poland’s government to reconsider its spending habits, emphasising the need for budget reductions to pave the way for interest-rate cuts.

In a recent assessment, the IMF advised the central bank to maintain a tight monetary policy throughout 2025, citing substantial inflation risks.

According to Geoff Gottlieb, IMF senior representative in Eastern Europe, “If the government introduced more tightening adjustments earlier, which is by the end of 2025, it would allow monetary policy to loosen faster.”

This proactive approach would not only facilitate interest-rate reductions but also mitigate public debt.

Poland’s current budget deficits, exceeding 5% of economic output, raise concerns about the country’s adherence to European Union regulations.

Prime Minister Donald Tusk’s government, however, appears reluctant to implement spending cuts ahead of next year’s presidential elections.

To address these fiscal concerns, the IMF recommends strategic measures, including: Raising select taxes to support budget consolidation; Implementing means-testing for social benefits to ensure support for the most vulnerable populations; and Saving revenue surpluses to avoid excessive spending.

Head of the IMF mission, Jan Kees Martijn, noted the importance of prudent financial management, stating, “If there’s any over-performance in revenues… save it, don’t spend more.”

Boluwatife Enome

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