25 July 2013 12:16
- In 2012, the state budget and the EU funds budget were executed at the time of deepening economic slowdown in Poland, recession in the European Union and deteriorating condition of the global economy.
- The scale of economic slowdown in Poland proved a bit larger than planned. The GDP growth rate was 0.6 percentage point (pp) lower than planned. The weakening economic growth caused stagnation in the job market. The registered unemployment rate reached 13.4 percent at the end of 2012 and was 1.1 pp higher than planned. In 2012, certain system changes were implemented to limit the growth of public debt and deficit of the public finance sector. According to NIK, though, these measures may be insufficient to permanently improve the public finance condition.
- The Supreme Audit Office has positively evaluated execution of the state budget and the EU funds budget in general terms. Despite unfavourable circumstances, these two budgets were executed in line with the Budget Act in 2012. The scale and weight of irregularities identified in the two budgets execution audit was insignificant, down from last year. Most areas covered by the audit were evaluated positively.
- In 2012, the public debt and the general government debt to GDP ratios lowered for the first time since 2007. It is the third year in turn, though, when the state public debt to GDP ratio exceeded 50 percent.
- Despite lowering the debt to GDP ratio, the high debt level still contributes to deepening imbalance of the state budget.
- As a member state of the European Union Poland was obliged to reduce the budget deficit to 3 percent GDP in 2012. This target was not met. Therefore, in 2013 Poland has been covered by the general government Excessive Deficit Procedure (EDP), imposed by the European Union Council.
- The budget deficit and debt levels calculated in line with the EU methodology are higher than the figures arrived at using the Polish method. This discrepancy is growing year after year. In our opinion, using different methods to establish the level of public debt, as well as the public sector deficit for domestic and international purposes creates an unclear picture of the public finance and weakens strict prudential procedures.
- The state budget revenue planned in the Budget Act was not executed. It was PLN 6.2 billion lower than planned. It was mainly caused by low tax revenue performance.
- The non-tax revenue plan was exceeded by nearly 37 percent, or PLN 10 billion.
- On-going recoverability of tax revenue and arrears from the past years decreased. Tax arrears grew faster than in previous years. At the end of 2012, they totalled PLN 27.1 billion and were 18.3 percent higher than in 2011.
- Expenditures of the state budget were PLN 10.8 billion lower than the limit set in the Budget Act. The execution of expenditures from the EU funds budget improved from a year before. Capital expenditures were in 2012 covered mainly from the EU funds budget, and in only 30 percent from the state budget. It shows how big role the EU funds play in the development of social and technical infrastructure. It should be stressed, however, that 2012 was another year when capital expenditures for tasks financed in whole from domestic funds went down (9 percent lower than in 2011). The EU funds budget revenue enabled financing of 94.7 percent of expenditures from that budget. Its deficit was not a consequence of the real absence of funds for expenditures but resulted from the way those funds were used by the Minister of Finance.
- The balance of on-going settlements between Poland and the European Union in 2012 was EUR 11.9 billion and went up by EUR 1.4 billion as compared with the previous year. Poland received EUR 15.4 billion from the EU, which makes 7.7 percent more than in 2011. At the same time, Poland paid to the EU budget EUR 3.6 billion - as part of premiums and reimbursements - which is 5.3 percent down from 2011.
- The Minister of Finance, using available tools to manage liquidity, ensured complete and timely service of domestic and foreign liabilities of the State Treasury.
- Most of the state special-purpose funds fulfilled their tasks properly, in line with financial plans. An exception is the Social Security Fund whose financial condition deteriorated. According to NIK, imbalance between the Fund’s revenue and expenditures should be reduced. Otherwise, it may pose a serious threat for the public finance in the coming years.
- Issues concerning remuneration for people occupying top managerial positions at the state level have not been solved yet. Also the principles of granting benefits in-kind to such persons need to be specified.
- The Supreme Audit Office positively evaluated performance of the monetary policy by the Monetary Policy Council in 2012. The National Bank of Poland did not have direct impact on external developments causing the inflation rise.
- As part of the state budget analysis NIK carried out an audit of budget reports and reports of financial operations. The audit has shown that the report of the Council of Ministers for 1 January to 31 December 2012 provides a real picture of the state budget execution.
- In June 2013, the Council of NIK passed a resolution in which it expressed its positive opinion on the vote of approval for the Council of Ministers for 2012.
