Poland is flourishing. The current government has entered the shoes of its predecessors and is very good for it. We have over 150 funds, agencies, institutes, centers. Including 20 funds in BGK outside the budget bill. The debt of these funds is expected to emergence to almost PLN 600 billion. We have fake moves alternatively of reform.
Progress is low
On 8 December in "Rymanowski's breakfast" in Polsat News, Piotr Zgorzelski argued with Michał Wawr about the current control of extra-budget funds. Zgorzelski argued that "many have already been done", Wawer claimed there was inactive no control. What's it truly like?
It is not actual that "many have already been done in this regard". advancement is small, alternatively fake. Poland's backing is fine.
Only 1 was liquidated for 131 non-budget units attached to the budget bill. In addition, there is inactive a parallel budget in BGK, a neo-budget and 20 funds, in which immense expenditure of over PLN 155 billion is planned for 2025 outside the budget bill, i.e. outside Parliament's control.The only affirmative thing is that the government started showing plans for these funds. We have transparency. There's no transparency. We know if the Constitution is bypassed. This parallel budget in BGK, this neo-budget is as bad as neo-KRS or pseudo-TK.
Central budget and state budget
The state budget is only a financial plan of central public authorities, i.e. ministries, offices, courts, tribunals. It does not include local governments that are independent of central authority and prepare their own local budgets, which are approved by municipal councils, cities. The state budget besides contains no subordinate central authority: non-budget entities, funds, agencies, institutes, centres, etc.
And this is simply a semantic problem worth paying attention to. The average citizen does not know the meaning and scope of the word "state budget". I am convinced that for the majority this is simply the full of public finances. But it's not. What is commonly called the "state budget" (BP) present is actually the "central budget" (BC). And the central budget is only part of the public finance sector. The misapplicable concept of "state budget" originates straight from the PRL. Like the then "State Council". As you can see, the first 1 is inactive fine. And it is very dangerous due to the fact that it disinformations – so Kowalski, as well as media and politicians.
State Budget and Budget Act
What is besides an crucial state budget cannot be identified with a budget bill that has a broader scope, as in addition to the strict state budget it contains various annexes, including the financial plans of non-budget entities, but only those defined in the Public Finance Act.
The Budgetary Act, like any another Act, consists of articles and paragraphs and additional formal tabular annexes. In addition to this, the bill is accompanied by the alleged justification (which is no longer published in the Polish Monitor), i.e. specified narratives, 1 can even say "beletry" the description of the budget bill and the assumptions adopted there. However, which is crucial is not a formal and binding part of the budget bill, justification of the full nature of the information only.
Parliament formally approves only part of the "article" of the Act and only this part is binding and requires the acceptance of any subsequent changes in the course of the financial year by Parliament or public finance committees. The government gets a discharge for clearing up part of the formal bill.The fall after the PiS – Polish palace
We have respective types of non-budget units under central authority that are listed in the Public Finance Act. They have been listed in the formal part of the budget law for years and their plans are formal annexes to that law. The types of these units are defined in the Public Finance Act and this Act includes detailed planning, monitoring, reporting and financial disciplines in those units.
Four types of non-budget units are attached to the budget bill:
1. State special-purpose funds (40 funds specified as the Social Insurance Fund or the Justice Fund
2. Executive agencies (10 agencies specified as NCBIR or Polish Space Agency)
3. Budgetary Economy Units (9 units, e.g. the Service Centre of the Chancellery of the president of Poland)
4. State legal persons (77 units e.g. ZUS, FRD).
In total, we already have 131 extra-budget units attached to the bill budget. That's a immense number. any of them are justified, of course, but many of them duplicate their functionsand their tasks can be carried out freely within ministries or another central offices.
Within 2 tens of specified units were formed by the United Right Government. Why? It is the effect of the alleged palace Poland - in 2015-2023, all minister, the centre of power wanted to have its treasury, i.e. funds, agencies, institutes, to make it easier to spend public money.It is worth reminding that Poland's fund comes from PRL. In the 1980s, the fund economy was the most developed among RPG members countries.
In 1988 41 peculiar intent funds functioned. 1 of Balcerowicz's improvement laws was the Act of December 14, 1990, which liquidated 16 central funds and put 4 in liquidation. All field-related funds were besides liquidated. There's only a twelve targeted funds left. After 35 years of transformation, we have again 40 special-purpose funds and 91 another extra-budget units attached to the budget bill.Disintegration and Dispersion
In the case of non-budget units attached to the budget bill there is no problem of parliamentary scrutiny, as Parliament formally accepts these plans as annexes to the budget bill. The problem is different. The problem is disintegration and dissipation of public finances. And as fresh years have shown in cloudy water, it is easier to spend public money on criminal corruption as well as political corruption, or buying votes.
The existence of specified a large number of non-budget units has no economical justification and causes waste of public money.Moreover, the Ministry of Finance itself in its White Paper ironically called the fund mess as “The universe of public finances”. And the study says, "The public finance sector in Poland is highly complex in all respect, and its primary aberration is the deficiency of uniform, clear rules for the creation and functioning of the units that form it".
Unfortunately, the annexes to the budget bill swell up.
The draft budget bill for 2025 lists 131 funds, agencies, institutes, centres and another units. There were 129 units in the bill a year ago. 3 units that have existed for many years have been added to the list (i.e. the Demographic Reserve Fund and 2 funds from KRUS).The praise should be given to Minister Bodnar, who abolished the Cybersecurity Centre and the tasks carried out there simply included him in his ministry. It's a decision in the right direction. However, the number of units is inactive huge. Poland's backing is fine. And let me remind you that after Balcerowicz's reforms we had only a twelve funds in our finances.
Other pseudo-funds in BGK
Unfortunately, apart from these standard non-budget units, as defined in the Act on Public Finances, there has been a cancer of public finances, namely funds at the Bank of the National Farm and 1 spending programme at the Polish improvement Fund. The PFR spending programme was no longer continued for predecessors, but We have 20 funds and programs in BGK. Unfortunately, no pseudo-fund in BGK has been liquidated or any work has been heard to consolidate these funds.
These funds should not be called out-of-budget funds. This name should be reserved for state-owned peculiar intent funds. The ones in BGK are pseudofunds that are not described in the Public Finance ActOh, my God!The financial plans for these funds are not attached to the budget bill. Parliament so does not approve the expenditure and debt of these funds. Unfortunately, over 155 billion expenditures are planned for 2025. These expenses are not under formal parliamentary control.
The funds in BGK are not subject to the Public Finance and Rigor Act. In order to change the fund's financial plan into BGK, it is not essential to get approval from Parliament or the parliamentary committee. These funds are, in fact, a parallel budget, a neo-budget spending outside Parliament's control, outside the budget bill. Unfortunately, in this regard, only certain fake movements were made. What is positive, Bank Gospodarstwa Krajowego publishes plans and reports on the implementation of plans of these funds. So we're clear.. Another simulated decision is to show the plans of these funds in the descriptive section of the Budget Act. However, these initiatives should be assessed positively, but they do not address the issue of formal parliamentary scrutiny and the regulation of law in public finances.
These funds were called "the Morawiecki spending paradise". Does the fresh government want to have its spending paradise? It all points to this, due to the fact that spending in funds in BGK outside Parliament's control is expected to proceed to grow with momentum. The debt in these funds has already exceeded PLN 400 billion. According to the project, the fresh budget in 2025 will amount to over PLN 450 billion and will increase to over PLN 606 billion by 2028.We have transparency, we have no transparency
I would like to point out here that transparency is not the same as transparency. Transparency means that the data are publically available, while transparency implies a clear and understandable presentation. Showing complex plans without counting deficits in these funds is not transparency. Showing a budget deficit without deficits in a parallel budget is not transparency.
We have transparency, we have no transparency, and there is surely no parliamentary control and respect for the rule of unity of public finance management through the budget law, which is protected by the Constitution in Article 219. The text of this article states that "The Sejm shall adopt the state budget for the financial year in the form of a budget bill".
There is no request to be a constitutionalist to know that under Article 219 of the Constitution, the ‘budgetary law’ is the basic financial plan of the State.The message ‘in the form of a budget bill’ closes all divisions. The transmission of supposedly full budget data to Eurostat does not fulfil the provision ‘in the form of a budget bill’. The presentation of data in statistical bulletins on the websites of the Ministry of Finance, the Central Statistical Office, or BGK does not meet the entry “in the form of a budget bill”. The presentation of these plans in the non-binding descriptive part of the Act does not fulfil the provision ‘in the form of a budget bill’. End of story. The constitutionalists call this principle, the rule of "basicity of the budget".
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‘The basicity of the budget as an act of financial management of a State or another Community means that the plan must include all the public gross and expenditure of that Community, or at least all those essential for the fulfilment of the public functions and tasks of the Community concerned, guaranteed by separate normative acts (requirement of planning universality). PROF. T. DĘBOWSKA-ROMANOWSKA, 2016’
And if that's not enough, we have a simple description of the situation erstwhile Article 219 of the Constitution is violated:
"The omission of state-owned organisational units carrying out public tasks of fundamental importance in the budget plans of the law to measure the performance of their constitutional and statutory functions, or to give them information plans of no relevance, leads straight to a breach of Article 219 of the PROF. T. DĘBOWSKA-ROMANOWSKA, 2016’
Time to reconstruct the regulation of law to public finances
The publication of plans for BGK funds in the descriptive section of the task or on BGK websites does not solve anything. It's a fake move. The transparency of these plans only shows if we are circumventing the Constitution.
The first and fundamental step in the recovery of public finances is so Restoring the regulation of law in public finances. "Rule of law" is besides a "rule of public finance law", we all request to understand, otherwise we will never reconstruct the regulation of law in Poland.This parallel budget in BGK is simply a neo-budget which is the same evil as neo-KRS or pseudo-TK.
The fresh majority does not appoint fresh members of the Constitutional Court due to the fact that it claims that this institution is constitutionally flawed and does not want to sanction it. Minister Bodnar does not announce fresh competitions for judges, due to the fact that they would gotta apply to the neo-KRS for approval, and does not want to sanction the neo-KRS. So in the Constitutional Court and in the neo-KRS, we do not incur a debt of breaking the regulation of law, and unfortunately in the neo-budget in BGK, there is inactive a fresh debt in immense amounts. Which violates Article 219 of the Constitution and contradicts the announcements of respective months ago.
The regulation of law cannot be selectively restored. And the regulation of law is besides the regulation of law of public finances and the respect of Article 219 of the Constitution.
Sławomir Dudek, president and Chief Economist of the Institute of Public Finance
Sławomir Dudek on Radio Rebeliant, 21 December 2024
