EU lifts Excessive Deficit procedures against Poland
PR dla Zagranicy
John Beauchamp
13.05.2015 18:23
The European Comission decided to retract its Excessive Deficit Procedure (EDP) on Poland, Wednesday, clearing the way for the government to ease public spending restrictions.
European Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici speaks on the economic governance decisions and the 2015 country-specific recommendations, including an end of the EDP for Poland. Photo: PAP/EPA/JULIEN WARNAND
The move to slap the EDP on Poland came in July 2009, with calls for Warsaw to reduce the deficit by 2012.
A year later, in June 2013, a decision was made that Poland had taken all measures possible, “but adverse economic events with major implications on public finances had occurred after the adoption of the original recommendation” the EC wrote in a statement.
Ultimately, the deadline was moved to 2015.
The full reason as given by the European Commission reads that:
“In Poland, the headline figure for the deficit was 3.2% of GDP in 2014, thus above the reference value of 3% of GDP. Costs are still occurring in 2014 from a systemic pension reform in 1999 even after a law reversed the reform in December 2013. Once these net costs of the pension reform from 1999 are taken into account, the deficit is below 3% of GDP in 2014 (2.7% in 2015). Thus the Commission considers that Poland respects the deficit criterion of the Stability and Growth Pact.”
The decision was met with enthusiasm by President Bronisław Komorowski, who said that it was “positive and optimistic news”.
The Commission’s decision allows for the Polish government to have a greater say on how public money is spent.
Bloomberg cites Polish Finance Minister Mateusz Szczurek as saying that the lifting of the EDP could allow Warsaw to raise public sector wages as well as introduce a tax break on research and development spending.
However, any cut to Poland’s VAT rate would be dependent on next year’s budget, Szczurek mooted.
The Commission decision now has to be rubberstamped by the EU Council, which is set to convene on the matter on 19 June. (jb)