Analysis of State budget implementation in 2023

nik.gov.pl 11 months ago

Statement by the president of the NIK in plenary session of the Sejm on the implementation of the State budget in 2023

Marshal! advanced Seymie!

It is my honour to introduce you to the House. Analysis of State budget implementation and monetary policy assumptionsin 2023 with the opinion of the College of the ultimate Chamber of Control on discharge for the Council of Ministers for the year 2023.

The ultimate Audit Chamber formulated an evaluation of the implementation of the budget law for 2023 in descriptive form.

The ultimate Audit Board states that, despite the fact that the Budgetary Act for the year 2023 and the study of the Council of Ministers on the implementation of the State budget for the period from 1 January to 31 December 2023 did not cover all operations affecting the state's finances, it was the state budget, the budget of European funds and the financial plans of the non-budget public finance sector units that were implemented in accordance with the Budgetary Act for the year 2023, and the study of the Council of Ministers was prepared in accordance with the applicable regulations on the basis of the data included in the reports of the individual directors.

High Seymie!

The combined revenues of the state budget and the budget of European funds amounted to PLN 650 billion in 2023 and were 12.5% higher than in 2022. A much higher increase was recorded for the full expenditure of the 2 budgets. They amounted to nearly PLN 735 billion and were higher than expenditures made more than 24% earlier. This means that the full deficit of the state budget and the European budget in 2023 amounted to PLN 84.7 billion and was almost PLN 71 billion higher than the erstwhile year.

The factors determining the above sizes are described in item in the analysis presented on 14 June this year.

I'd just like to stress here. marked increase in the taxation gap on goods and services in 2023, which, according to the preliminary estimates of the Ministry of Finance, was close to 16% and was six times the lowest value obtained in 2021 and twice as advanced as in 2022.

An alarmingly advanced in 2023, there was besides the value of spending on handling the State Treasury debt. The expenditure for this intent amounted to nearly PLN 62 billion, which means that it increased almost twice compared to 2022.

Another issue I would like to draw attention to is the increase in net lending needs recorded in 2023 the state budget. While these needs reached PLN 50 billion in 2020 and did not happen in 2021-2022, in 2023 it amounted to almost PLN 138 billion.

As I have already mentioned, both the budget bill and the implementation study of the state budget did not cover all operations affecting the state's finances.

This means that, as in the erstwhile 3 years, the state's financial economy was conducted mostly outside the state budget and without the rigors appropriate to that budget, or even outside the public finance sector.

The ultimate Audit Chamber has been negatively assessing the continuing trend in the usage of activities that violate basic budgetary principles since 2020, in peculiar the rule of unity, transparency and transparency of the budget. These actions reduce the importance of the state budget as the most crucial financial plan as defined in Article 219 of the Constitution of the Republic of Poland.

First, part public tasks were inactive financed through funds operated by Bank Gospodarstwa Krajowego.

In 2023, over PLN 130 billion was financed by the funds, representing 20% of the state budget expenditure and nearly 4% of the gross home product.

The debt of funds of Bank Gospodarstwa Krajowego at the end of 2023 amounted to PLN 277 billion, which means an increase compared to the erstwhile year by almost 21%. It is worth noting at this point that backing of these funds takes place without parliamentary scrutiny.

Secondly, inactive securities were transferred free of charge to various entities in the treasury. The amount of specified financing in 2023 is PLN 21.6 billion. A full of PLN 88 billion was transferred in 2020-2023.

Third, in 2023. from the funds of the Polish improvement Fund were financed investments carried out under the National Recovery and Enhancing opposition Plan. The value of spending on “pre-financing” investments from this source, in the years 2022-2023, amounted to PLN 5.1 billion.

The implementation of these operations has, inter alia, resulted in a crucial simplification in parliamentary and social control over the collection and spending of part of the funds on public tasks, as well as a deficiency of transparency in the transfer of public funds. As a result, the budget did not reflect the actual state of imbalances.

In 2023, outside the budget bill, operations were carried out resulting in a deficit of 37% of the government subsector, which amounted to PLN 135.6 billion.

Here it should be recalled and shared the position expressed by prof. Teresa Dębowska-Romanowska that depriving the budget bill of its political rank by bringing it only to the function of an "automate" paying benefits resulting from separate statutory obligations is destroying democracy.

High Seymie!

Public debt calculated according to the national definition, i.e. state public debt, amounted to over 1 trillion PLN 300 billion in 2023 and was higher than at the end of 2022 by nearly 10%. The gross home product was 38.9%. The general government debt, calculated by EU definition, amounted to nearly 1 trillion PLN 700 billion and was higher than in 2022 by almost 12%. The gross home product was 49.6%.

Thus, another year in a row increased the difference between sovereign public debt and government debt. At the end of 2023, it reached a level exceeding somewhat PLN 363 billion and was higher than in the erstwhile year by about 20%.

The reason for the difference was the non-recognition of debt calculated according to the national definition, among another things, debt of funds located in Bank Gospodarstwa Krajowego and debt due to the financial shield of the Polish improvement Fund. The liabilities from the sale of bonds by Bank Gospodarstwa Krajowego and the Polish improvement Fund as well as loans drawn by Bank Gospodarstwa Krajowego, in order to rise funds for public tasks at the end of 2023, amounted to PLN 348 billion.

Estimated by the ultimate Chamber of Control full costs of servicing bonds issued by Bank Gospodarstwa Krajowego for the COVID-19 Anti-Activation Fund, the Armed Forces Assistance Fund and the Polish improvement Fund to carry out the tasks of the State throughout their maturity period, by 2042, will be higher by almost PLN 14 billion the costs incurred by the State budget to finance these tasks by means of fiscal securities.

It should be stressed that the ultimate Audit Chamber has for many years pointed out the request to harmonise the method of calculation 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. However, it is worrying that the share of these assessments in relation to the number of all assessments made will decrease importantly between 2020 and 2023. In 2020, the proportion of affirmative assessments was almost 80% and in 2023 small more than 60%. At the same time, the share of negative assessments has increased by 4 percent points over the 4 years.

The change in the structure of the evaluations demonstrates a simplification in the quality of implementation of the budget law.

At the end of the presentation on the implementation of the state budget, I will present the most crucial systemic irregularities, which were, of course, discussed by the ultimate Audit Chamber during the work of the various parliamentary committees.

As in the erstwhile 2 years stabilising spending rules was not crucial in reducing the increase in public spending.

In 2023 there was another significant increase in planned measures in the peculiar provisionswhich together accounted for as much as 17.5% of the national budget and the European budget.

An crucial part of the general reserve was spent against its intervention, i.e. tasks which did not arise from sudden, unpredictable situations requiring immediate action. In addition, the distribution of funds from the general reserve was not transparent and was not decently documented.

Deeper imbalance in the revenues and costs of the State's peculiar intent funds. Some of these funds continued to finance tasks not related to the objectives for which they were originally created. An example is the payment of 14 pensions from the Solidarity Fund.

Significant irregularities were besides found in part National Defense.These included, among another things, leaving an informal reserve of PLN 8 billion at the level of the Ministry of National Defence, or spending PLN 2.2 billion in a non-target, unprofitable way and in violation of common rules, which is peculiarly unacceptable given the ongoing armed conflict in Poland abroad.

In turn in control Ombudsman for the Rights of the Child and Institute of National Memory smaller amounts but not little gross, irregularities have been revealed. Disposals of these parts have been accused of being unprofitable, which can be considered to be a misappropriation of public funds which may bear the characteristics of a crime.

In 2023 it continued under-financing of police units. This led to the fact that the unit liable for the safety of citizens regulated obligations on a large scale after the deadline for payment and so besides borne interest costs.

I besides draw attention to high hazard of non-use by 31 August 2026 of measures of the National Recovery and Immunity Plan because of their low level of commitment. By the end of 2023, little than 3% of the planned funds in KPO were spent.

Numerous irregularities management and management of public funds, including the last-period freedom of action of budget administrators, we have besides stated in another checks carried out in 2023.

As part of the audit National Institute of Freedom-Center for civilian Society Development We found, among another things, that the process of evaluating applications for funding, as well as verifying and clearing them, was unreliable, and in any cases illegal, untargeted or uneconomic.

The results of the 2 another controls indicate, in turn, a simplification in the financial autonomy of local government units between 2019 and 2023 and their greater dependence on funds granted by the elected government authorities on the basis of unclear criteria.

High Seymie!

I presented only examples identified by the ultimate Chamber of Control of irregularities exposing the way public funds are managed in 2023 and in earlier years. As I have already pointed out earlier, the scale of the House's objections to state financial management is very worrying and requires immediate corrective action.

High Seymie!

The ultimate Audit Chamber of the 3rd consecutive year formulated an assessment of the implementation of monetary policy assumptions in 2023 in descriptive form.

As in erstwhile years, the main nonsubjective of monetary policy was to keep a medium-term price index of 2.5% for consumer goods and services with a one-percent deviation range. In 2023, the average value of this indicator was 11.4%.

In September 2023, the Monetary Policy Council made the highest in over 14 years, a simplification of the mention rate of 0.75 percent points, and in October 2023 a further 0.25 percent points. As a consequence of these changes, the NBP mention rate decreased to 5.75%.

The decisions to reduce interest rates, and in peculiar the 1 from September 2023, were not consistent with the erstwhile communication of the National Bank of Poland, and the scale of the highest interest rate reductions in 14 years has not been clearly justified, which gives emergence to doubts about the reasons for the Monetary Policy Council's decisions.

The core inflation rate has remained higher than the consumer price index since September 2023. This may have meant that request factors play an crucial function in the improvement of consumer prices, i.e. factors on which the National Bank of Poland may have been affected by national monetary policy instruments.

Marshal! advanced Seymie!

College of the ultimate Chamber of Control, after getting acquainted Analysis of the implementation of the state budget and monetary policy in 2023, On 6 June this year, it adopted a resolution in which it expressed its opinion on the discharge to the Council of Ministers for 2023.

The College of the ultimate Chamber of Control, expressing its negative assessment of changes in the public finances system, one more time pointed to the request for effective action to guarantee the transparency and transparency of public finances and reconstruct the budgetary function of the basic act of State financial management.

According to the College, funds for financing the tasks of the State outside the budgetary act, including in the form of fiscal securities and from funds operated by the Bank of National Holding, should be discontinued.

The College besides points to the request for action by the Minister of the Interior and Administration and the Minister of Finance in order to guarantee the measures essential for the functioning of this formation in the plan of police spending.

Given the nature and degree of the irregularities identified in the planning and spending of public funds, The College proposes that the directors of these measures respect the principles of the budget economy.

In conclusion, the ultimate Audit Board will consistently and powerfully measure and measure the actions that consequence in: a simplification in the state budget, a weakening of the appropriate functioning stabilizing the spending rule, higher costs of servicing bonds issued by entities outside the public finance sector, and an ever-increasing exemption of the state's liabilities from sovereign public debt, resulting in the size of that debt becoming irrelevant erstwhile assessing the actual scale of sovereign debt.

Marshal! advanced Seymie!

I will repeat erstwhile again, in favour of the resolution of the College of the ultimate Audit Chamber on discharge. Further lowering of the state budget may lead to the incompatibility of the adopted solutions with the Constitution of the Republic of Poland, as well as to the abolition of political and legal work for the management of public finances, and hence for the state and its sovereignty.

Thank you for your attention!

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