Analysis of State budget implementation in 2024

nik.gov.pl 1 day ago

Statement by the president of NIK to the Parliament's plenary session on the implementation of the state budget in 2024

Marshal! advanced House!

In fulfilling my work under the Constitution of the Republic of Poland, I have the honour to present to the advanced Chamber Analysis of State budget implementation and monetary policy assumptionsin 2024 together with the opinion of the College of the ultimate Audit Chamber on discharge to the Council of Ministers for the year 2024.

The ultimate Audit Chamber of the 5th consecutive year formulated an assessment of the implementation of the budget law in descriptive form.

The ultimate Chamber of Control states that the study of the Council of Ministers on the implementation of the State budget for the period from 1 January to 31 December 2024 provides, in all applicable respects, reliable information and data on the amount of revenue, expenditure, debts and liabilities and the deficit of the State budget.

At the same time, the ultimate Audit Board welcomes the changes proposed by the Minister of Finance to reconstruct the transparency of the state's finances, to give appropriate weight to the planning and financial reporting of public finance sector units, to order public expenditure in the context of their intent and efficiency in seeking liable management of public debt, and to reduce the usage of extra-budget funds.

However, the ultimate Audit Chamber reiterates a very crucial issue that cannot be ignored. erstwhile again, both the budget bill and the study of the Council of Ministers on the implementation of the state budget do not reflect the full image of the actions which affect the result of the state budget and, consequently, the state finances.

High Seymie!

Total revenue State budget and European budget amounted to PLN 677 billion in 2024 and were somewhat more than 4% higher than in 2023. A importantly higher increase was observed for Total expenditure These 2 budgets.

They amounted to PLN 899.5 billion and were higher from expenditure effected 1 year earlier over 22%.Total deficit State budget and European budget reached PLN 222.5 billion in 2024. It should be noted that for the first time in 2024 it was included in the deficit of the state budget for the 13th and 14th retirement payments, which the ultimate Audit Board welcomes in the implementation of the principles of transparency and transparency of public finances.

The factors determining the above sizes are described in item in the analysis presented on 16 June this year.

In 2024, the value of spending on the handling of sovereign debt, which amounted to nearly PLN 66 billion, continued to be high.

The net lending needs have besides increased further. the state budget. These needs have increased by more than 1/3 compared to the erstwhile year, i.e. by nearly PLN 43 billion.

As I have already mentioned, both expenditure and the deficit of the state budget did not include all operations affecting the state's finances.

This means that the financial economy of the state in 2024 continued to be mostly outside the state budget and without the rigours appropriate for this budget, or even outside the public finance sector.

The ultimate Audit Chamber has been negatively assessing action since 2020, on a large scale, to reduce the state budget as the most crucial financial plan referred to in Article 219 of the Constitution of the Republic of Poland.

These actions violate basic budgetary principles, in peculiar the rule of unity, transparency and transparency of the budget.

Another year in a row, financing an crucial part public tasks were carried out outside the budget law.

In 2024, over 135 billion PLN was financed by the funds provided by BGK, representing over 16% of the state budget and nearly 3.7% of the gross home product.

The debt of funds operated by Bank Gospodarstwa Krajowego at the end of 2024 amounted to nearly PLN 350 billion, which means an increase compared to the erstwhile year by more than 1⁄4.

In 2024, as in erstwhile years the entities selected were transferred free of charge to the treasury securities. Their value amounted to PLN 24 billion, which is over PLN 2 billion more than in 2023. In total, nearly PLN 118 billion were transferred in 2020-2024.

In particular, the implementation of these operations resulted in a simplification in the importance of the State budget. Again, as I did between 2020 and 2023, these operations not only undermine the transparency of the presented data on public finances, but, most importantly, they importantly restrict parliamentary and social control over the collection and spending of part of the funds on public tasks.

However, the ultimate Chamber of Control welcomes the Government's actions resulting in an expanding share of the financial imbalances of the government subsector in the state budget alternatively than, as in erstwhile years, in non-budget institutions not subject to regular Parliamentary scrutiny.

At the same time, the Chamber points out that the general government deficit in 2024 amounted to nearly PLN 240 billion, with a gross home product ratio of 6.6%, reaching the second highest score in the European Union and maintaining a level comparable to the 2020 indicator erstwhile the COVID-19 epidemic began.

The 3rd year in a row this relation exceeded the 3% threshold set for EU countries, resulting in Poland being placed under the excessive deficit procedure by the European Commission in 2024.

High Seymie!

In 2024 about 20% increase in debt volume public both according to national rules and adopted by the European Union. The government debt calculated by national definition, i.e. state government debt, in relation to gross home product was 44.3%, and general government debt, established by EU rule, 55.3%.

Thus besides increased the difference between the values of these debts and at the end of 2024 it exceeded PLN 400 billion. The difference was 11% of the gross home product.

This difference was due to non-recognition in debt calculated according to the national definition, among another things, of debt of funds located in the Bank of the National Holding and debt due to the financial shield of the Polish improvement Fund.

The liabilities on the sale of bonds by these entities, as well as on loans taken by Bank Gospodarstwa Krajowego, in order to rise funds for public tasks at the end of 2024, amounted to PLN 460 billion. At this point, it should be noted that the volume of loans to finance the expenditure of the National Road Fund and the Armed Forces Support Fund has more than doubled over the course of 2024.

I would besides like to stress that the functioning of the funds in the Bank of the National Farm not only violates the principles of public finances, but is besides economically inefficient. Estimated by the ultimate Chamber of Control full costs of handling bonds issued by BGK for the COVID-19 Anti-Action Fund, the Armed Forces Assistance and Support Fund and bonds issued by the Polish improvement Fund to carry out the tasks of the State throughout their maturity period, i.e. until 2054, will be higher over PLN 19 billion on the costs incurred by the State budget to finance these tasks with fiscal securities.

High Seymie!

I would besides like to point out that according to the forecast in Debt management strategies of the public finance sector from 2025 to 2028, in 2026 the ratio of public debt calculated in accordance with the rules adopted by the European Union to gross home product will be higher than 60%. This poses a hazard of exceeding the second, after deficit, prudential threshold and may consequence in an extension of the excessive deficit procedure for Poland and the request for additional corrective measures. At the same time, NIK welcomes that for the first time in Strategies information on the debt of funds located in the Bank Gospodarstwa Krajowego and the forecast of the costs of its operation is provided. specified action is part of the implementation of the principles of transparency and transparency of public finances.

It should be stressed that the ultimate Audit Chamber has for many years highlighted the request to harmonise the rules for the presentation of sovereign public debt and government debt so that the value of sovereign public debt expresses the actual sovereign debt.

High Seymie!

Most of the State budget implementation controls have been positive. Nevertheless, 8 audited entities identified irregularities which were so crucial that the implementation of their financial plan was assessed negatively.

To conclude this part of my speech, I would besides like to draw attention to the key systemic irregularities, which were discussed in item by the representatives of the ultimate Audit Committee during the meetings of the various parliamentary committees.

As in the erstwhile 3 years the stabilising spending regulation did not guarantee the restoration of the State's financial balance and was not an crucial component in the planning of state budget expenditure. Nor did the work done to strengthen this process. expenditure reviews.

In 2024, a advanced proportion of state budget and European budget expenditure planned in Special intent reserves. They were 14.5% (Fourteen and 5 tenths of a percent) expenditure planned the state budget and the European budget.

Despite the actions taken to improve transparency of the general reserve process, This process was not full transparent. Part of this reserve is inactive allocated for tasks which did not arise from sudden, unpredictable situations requiring immediate action.

Other crucial irregularities afraid both the planning process and the implementation of the budget law. Among another things, it was found that funds were not spent, including those obtained from budgetary provisions, whether grants were granted without a legal basis or at an incorrect amount. The full amount of irregularities found in the trials is over PLN 13 billion.

High Seymie!

I have presented only a fewer examples identified by the ultimate Chamber of Control in the area of public funds management in 2024 and in earlier years.

As I mentioned in today's speech, the scale of the House's objections to state financial management is inactive worrying. The home thus upholds the conclusions that have consistently been formulated over the last 4 years.

High Seymie!

Maintaining the current state of affairs carries a serious hazard of further weakening the rank of the budget bill, that is, a paper whose meaning is clearly defined in the Constitution of the Republic of Poland. In this situation, there is no place to delay. Urgent corrective action is needed.

I would besides like to point out that from the funds received so far for implementation National Reconstruction Planonly 10% were used, despite that the investment deadline under this Instrument will be over next year. The expenditure certification rate for the European Commission under the Financial position 2021-2027 is besides low. In this area too, urgent and effective action is needed to usage the funds allocated to Poland.

High Seymie!

The ultimate Chamber of Control 4th year in a row evaluated the implementation of monetary policy in 2024 in descriptive form.

Despite a crucial fall in the average yearly inflation rate compared to this in 2023, erstwhile it reached over 11%, in 2024 its average value was 3.6%. This means that the level of 2.5% adopted in Monetary policy objectives for 2024.

Another issue I would like to draw attention to is the maintenance by the Monetary Policy Council in 2024 of interest rates unchanged since October 2023, despite the fall in inflation, in the first half of the year. As a result, real interest rates for the full 2024 year were positive, which in practice meant tightening monetary policy and was justified in terms of bringing inflation to the level of the inflation mark adopted by the Monetary Policy Council.

It should be noted that the tightening of monetary policy was not clearly communicated, and so the National Bank of Poland did not usage the anticipation of reducing inflation expectations with this tool.

Given the situation in the financial sector, I would like to point out that the Monetary Policy Council should consider the appropriateness of keeping minimum reserves at a advanced level, at a advanced level, equal to the mention rate.

Marshal! advanced House!

College of the ultimate Chamber of Control, after getting acquainted Analysis of State budget implementation and monetary policy assumptions in 2024, On 10 June this year, it adopted a resolution in which it expressed its opinion on discharge to the Council of Ministers for 2024.

The College of the ultimate Chamber of Control maintained its position presented in the erstwhile 2 years with respect to taking action to reconstruct the state's budget to its central position as defined in the Constitution of the Republic of Poland, together with the deadlines for their implementation.

According to the College of the ultimate Chamber of Control, operations carried out in the subsector of government institutions affecting the amount of public debt should be recognised in the gross and expenditure of the state budget.

The College besides requested action to align the rules on the presentation of government debt with public debt.

Bearing in head the identified irregularities in the area of College planning, it besides pointed out the request to increase the precision of the planning of funds in the state budget and the budget of European funds.

In conclusion, the ultimate Audit Chamber will proceed to consistently measure and measure the actions that consequence in: a simplification in the level of the state budget, higher debt service costs generated by entities outside the public finance sector, and an ever-increasing exclusion of the state's liabilities from sovereign public debt, as a consequence of which the size of this debt ceases to reflect the actual state debt.

Marshal! advanced House!

citing the authority of the technological community, it should be stressed with full force that only the budget bill is competent to find the gross and expenditure of the State, which, in accordance with the Constitution of the Republic of Poland, covers all public funds. There can be no laws competing with budget laws in determining state finances. It should besides be stressed that it is the Government that conducts the financial economy of the State, while maintaining appropriate control of Parliament, alternatively than another entities specified as, for example, Bank Gospodarstwa Krajowego, even if they are authorised by average laws.

Thank you for your attention!

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