## IMF Executive Board Concludes 2024 Article IV Consultation with the Republic of Poland _IMF News, January 21, 2025_ ## Source details **Canonical URL:** [IMF Executive Board Concludes 2024 Article IV Consultation with the Republic of Poland](https://www.imf.org/en/news/articles/2025/01/16/pr25004-poland-imf-executive-board-concludes-2024-article-iv-consult) ## Other formats - [Markdown version](/en/news/articles/2025/01/16/pr25004-poland-imf-executive-board-concludes-2024-article-iv-consult/index.md) - [Structured JSON version](/en/news/articles/2025/01/16/pr25004-poland-imf-executive-board-concludes-2024-article-iv-consult/index.json) - [Bundle manifest](/en/news/articles/2025/01/16/pr25004-poland-imf-executive-board-concludes-2024-article-iv-consult/bundle-manifest.json) ## Bibliographic details - Published: January 21, 2025 --- ### Macroeconomic outlook and growth - Economic growth is estimated to have accelerated in 2024 to 2.8 percent, driven by a rebound in domestic demand, mainly from private consumption rising due to strong nominal wage growth and lower inflation. - Net exports became a drag on growth in 2024 as higher imports from increased consumption outpace exports hindered by weak Euro Area demand. - Growth is projected at around 3.5 percent in 2025 and 2026, supported by expected absorption of Next Generation EU (NGEU) funds. - Over the medium-term, as the impact of NGEU funds absorption unwinds, growth is expected to moderate to slightly below 3 percent largely due to population ageing. ### Inflation, labor market, and monetary policy - Inflation has declined considerably from 2023 but remains well above the central bank inflation target despite the tight policy stance. - Core inflation remains elevated in the context of strong wages growth amid a still-tight labor market. - Absent surprises, both core and headline inflation should peak before mid-2025, then moderate to around the upper end of the target range of 2.5±1 percent by end-2025. - Directors emphasized the importance of maintaining a tight monetary policy stance to ensure inflation converges to target. - Directors agreed that interest rate cuts should commence only when wage growth is decelerating, and inflation is firmly declining towards the target. ### Fiscal position and public debt - The fiscal deficit is estimated to have widened to 5.9 percent of GDP in 2024 amidst a moderately expansionary fiscal stance (0.3 percent of GDP). - The 2024 deficit widened as permanent increases in public sector wages and social benefits outweighed savings from the lower cost of energy support measures. - The deficit is expected to remain elevated in 2025 at 5.6 percent of GDP, in part due to high defense spending. - The authorities have announced fiscal consolidation over the medium-term aiming for a deficit of 2.9 percent of GDP by 2028; some consolidation measures remain to be identified. - IMF staff projects, based on measures identified so far, that the deficit will decline to 3.5 percent of GDP over the medium-term with public debt stabilizing around 65 percent of GDP. - Directors recommended: - Rebalancing fiscal policy to rebuild buffers and support disinflation as the recovery becomes more entrenched. - Identifying necessary fiscal measures upfront to strengthen the Medium-Term Fiscal Structural Plan’s credibility. - Mobilizing revenues, improving targeting of social benefits, and reforming the pension system. - Frontloading more of the planned medium-term deficit reduction to 2025 to help reduce debt and enhance resilience. - Enhancing fiscal transparency and governance and establishing a fiscal council. ### Financial sector resilience and credit - The financial system remains resilient and private credit is recovering slowly. - Capital and liquidity buffers remain well above regulatory requirements, while asset quality has improved. - Bank profits increased due to wider net interest margins with high liquidity keeping deposit rates subdued. - Private sector credit has recovered somewhat since bottoming out in mid-2023, partly due to a subsidized mortgage scheme. - Directors noted that further regulatory policy tightening should consider the impact on the nascent credit recovery. - Directors called for efforts to proactively reduce legal risks to financial sector stability and remove distortions affecting private credit. - Directors welcomed the elimination of the mortgage credit holidays. ### Structural reforms and long-term challenges - Directors underscored the importance of comprehensive structural reforms to foster sustainable growth. - Policy priorities highlighted by Directors: - Capital deepening and facilitating resource reallocation. - Nurturing innovation capacity. - Decarbonizing the economy to meet EU targets for 2030. - Ensuring adequate labor supply by supporting the integration of women, old age adults, and refugees into the labor market. - Directors recognized progress on reducing emissions and encouraged further actions to meet climate goals and safeguard competitiveness. ### Executive Board Assessment - Executive Directors agreed with the thrust of the staff appraisal. - Directors commended the Polish authorities’ prudent policies that have resulted in impressive economic and social gains and accelerated absorption of New Generation EU funds. - While welcoming the ongoing recovery and the positive near-term outlook, Directors noted that risks are tilted to the downside and inflation remains elevated, given a tight labor market and strong wage growth. - Directors highlighted the need to rebalance the policy mix to help rebuild buffers, strengthen resilience, and support private investment-led growth. - Structural reforms to boost productivity and tackle longer-term challenges from ageing and the climate transition are important. ### Key statistics (Table 1: Selected Economic Indicators, 2022–29) - GDP (change in percent) 1/: 2022: 5.3; 2023: 0.1; 2024: 2.8; 2025: 3.5; 2026: 3.3; 2027: 3.1; 2028: 2.7; 2029: [not listed] - Output gap (percent of potential GDP): 2022: 2.3; 2023: -0.9; 2024: -1.0; 2025: -0.4; 2026: -0.2; 2027: 0.0 - Headline CPI inflation (percent) Average: 2022: 14.4; 2023: 11.4; 2024: 3.8; 2025: 4.6; 2026: 2.9; 2027: 2.5 - Headline CPI inflation (percent) End of period: 2022: 16.6; 2023: 6.2; 2024: 5.1; 2025: 3.7 - Unemployment rate (average, according to LFS): 2022: 3.2; 2023: 3.4 - Public finances (percent of GDP) 2/ General government net lending/borrowing: 2022: -3.4; 2023: -5.3; 2024: -5.9; 2025: -5.6; 2026: -4.9; 2027: -4.1; 2028: -3.6; 2029: -3.5 - General government cyclically-adjusted balance: 2022: -4.6; 2023: -4.8; 2024: -5.4; 2025: -3.7 - General government primary balance: 2022: -3.1; 2023: -2.7; 2024: -3.0; 2025: -2.9; 2026: -2.2; 2027: -1.5; 2028: -1.1 - General government debt: 2022: 48.8; 2023: 49.7; 2024: 54.1; 2025: 57.8; 2026: 61.3; 2027: 62.5; 2028: 63.2; 2029: 63.8 - Balance of payments Current account balance (percent of GDP): 2022: -2.3; 2023: 1.8; 2024: 0.3; 2025: -0.3; 2026: -0.7; 2027: -1.2 - Total external debt (percent of GDP): 2022: 53.2; 2023: 45.1; 2024: 43.9; 2025: 42.9; 2026: 41.9; 2027: 41.0; 2028: 40.1 - Memorandum item: Nominal GDP (billion zloty): 2022: 3100.8; 2023: 3401.6; 2024: 3601.6; 2025: 3898.7; 2026: 4169.8; 2027: 4409.6; 2028: 4646.5; 2029: 4889.1 *IMF Executive Board Concludes 2024 Article IV Consultation with the Republic of Poland, January 21, 2025.* --- ## References - [Republic of Poland and the IMF](http://www.imf.org/external/country/POL/index.htm) - [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance) - [Press Releases](https://www.imf.org/en/news/searchnews) - [PRESS CENTER](http://presscenter.imf.org/) - [http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm) - [https://www.imf.org/en/home](https://www.imf.org/en/home) _Source: https://www.imf.org/en/news/articles/2025/01/16/pr25004-poland-imf-executive-board-concludes-2024-article-iv-consult_