Poland: Staff Concluding Statement of the 2025 Article IV Mission
IMF News, November 24, 2025
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- Published: November 24, 2025
Mission overview and key messages
- IMF mission led by Geoff Gottlieb, with Kareem Ismail, Moheb Malak, Alla Myrvoda, and Yang Yang, visited Warsaw during November 12–24, 2025 for the 2025 Article IV consultation.
- Poland’s recovery remains strong with one of the highest growth rates in Europe; inflation is within the central bank’s target range.
- Recovery drivers: robust wage gains and accommodative fiscal policies. Disinflation drivers: appropriately tight monetary policy and favorable external factors (lower global prices and a stronger exchange rate).
- Main concerns: sharply deteriorating fiscal position, rising public debt, population aging, limited innovation, low investment, and a polarized political environment.
- Policy priorities:
- Stabilize public debt through credible fiscal consolidation, high-quality measures, and a strengthened fiscal framework.
- Ensure inflation becomes well-anchored around the midpoint of the target range by slowing the pace of any further monetary easing.
- Reduce distortions and legal risks constraining credit provision while preserving financial stability.
- Advance structural reforms domestically and at the EU level to boost innovation, deepen capital markets, support labor productivity, and increase energy competitiveness.
Recent developments
- Real output has risen by 6 percent since end-2023, driven by rising real wages and strong private consumption.
- Inflation and labor market:
- Inflation reached 2.8 percent year-on-year in October; within NBP’s 2.5 percent +/-1 percentage point target range.
- Core inflation is 3 percent.
- Nominal wage growth: 7.5 percent y/y in Q3.
- Employment in the corporate sector has been falling and wage growth has been cooling substantially.
- External position:
- Current account has shifted to a small deficit; external position broadly in line with medium-term fundamentals and desirable policies.
- Fiscal developments:
- In 2025, fiscal deficit and public debt are projected to reach 7 percent and almost 60 percent of GDP, respectively.
- Widening of the fiscal deficit since 2021 reflects a 6.5 percent of GDP increase in expenditures; revenues rose by 1.2 percent of GDP during this period.
- Public debt has been rising at around 5 percent of GDP annually in recent years.
- Policy mix: fiscal stimulus supported demand while appropriately tight monetary policy partly offset these gains; economy now operating near potential with relatively tight labor markets.
Economic outlook and risks
- Near-term growth projections:
- Growth is projected to reach 3.2 percent in 2025 and accelerate to 3.4 percent in 2026 as NGEU fund execution accelerates.
- Growth expected to slow to 2.5 percent by 2030 due to population aging and moderating productivity gains.
- Current account and fiscal projections:
- External position expected to stabilize around a small current account deficit of 1.6 percent of GDP.
- Baseline projects moderate cumulative fiscal consolidation of about 2 percent of GDP over the medium term, causing debt to rise to 76 percent of GDP in 2030 (including around 3 percent of GDP in RRF loans on-lent to the private sector).
- Staff assesses Poland’s risk of sovereign debt stress to be at medium (previously low).
- Balance of risks (downside orientation):
- Domestic risks:
- Failure to access remaining NGEU grants before expiry in 2026 could reduce investment.
- Market sentiment could shift with large fiscal deficits and limited consolidation, pushing up yields.
- Inflation pressures could resume if growth surprises positively and slack is less than estimated.
- Real effective exchange rate appreciation of 20 percent over 2023-24 may hurt competitiveness more than estimated.
- External risks: deterioration in regional security and further headwinds to global trade.
- Upside opportunities and buffers:
- Upside from higher immigration, stronger catalytic effect from NGEU funds, and productivity gains from digital, AI, and green transitions.
- Buffers include ample foreign exchange reserves, a flexible exchange rate, a diverse export and production base, and financially healthy enterprises, households, and banking system.
Safeguarding fiscal sustainability — recommendations and numbers
- Priority: arrest the rapid rise in public debt.
- Recommended fiscal adjustment:
- Cumulative fiscal adjustment of 4 percent of GDP by 2030 (2 percent of GDP more than the baseline projection).
- The 2026 budget targets consolidation of 0.6 percent of GDP—viewed as a good first step; overperformance recommended.
- This recommended path would bring the medium-term deficit to 3 percent of GDP and stabilize debt at 70 percent of GDP.
- Further adjustment of 1.5 percent of GDP thereafter would be needed to rebuild fiscal buffers and fully comply with the EU Economic Governance Framework.
- Composition guidance:
- If maintaining current expenditure levels on social spending, defense, and public wages, revenues will need to rise.
- Personal income tax (PIT) generates 5 percent of GDP less in revenues than the EU average — identified as a main outlier.
- VAT revenue could be strengthened by reducing exemptions and preferential rates, which are among the most costly in the EU.
- Preferential and regressive taxation of real estate (rental income, capital gains, property tax, and VAT) could be moderated, particularly on second and third properties.
- If higher taxes are infeasible, options include a smaller public sector via better targeting of social benefits and a smaller public wage bill.
- Fiscal framework:
- Progress on amendments widening coverage of the stabilizing expenditure rule welcomed.
- Steps to establish the fiscal council and recent appointment of a President are welcome; critical that the council is independent and adequately funded.
Ensuring durable descent of inflation
- Current inflation indicators:
- Headline inflation: 2.8 percent.
- Core inflation: 3 percent.
- Nominal wage growth: 7.5 percent y/y in Q3.
- Recently approved 3 percent increase in both the minimum wage and public sector wages for 2026.
- Assessment:
- Disinflation achieved with limited costs to growth or employment; endorsements of prior policy caution.
- Slack in the economy is very uncertain but likely close to zero; some price pressures remain high (sequential services inflation in Q3 slightly below 6 percent).
- Disinflation has been supported by external factors (import prices and currency appreciation) that could reverse.
- Policy recommendation:
- With policy rate potentially close to neutral, merit in slowing the pace of any further easing.
- Advocate a wait-and-see approach to observe incoming data and sustain disinflation toward target.
- If core inflation continues to moderate, further easing might be possible.
- Communication should underscore the decision-making process rather than predict specific rates.
Reducing frictions to credit provision while preserving financial stability
- Banking sector stability:
- Tier 1 ratio above 20 percent.
- Basel III liquidity ratios comfortably met.
- NBP stress tests indicate resilience under severe deposit outflows.
- Short-term deposits are the majority of bank funding; about 80 percent of household deposits are guaranteed by deposit insurance.
- Most private credit (including two-thirds of mortgages) has floating interest rates.
- Credit provision constraints:
- Poland’s gap between lending and benchmark interest rates (“mark-ups”) is the second highest in the EU.
- Credit as a share of GDP remains historically low.
- Recommended reforms to reduce mark-ups:
- Bank Tax:
- Asset taxes like the current bank levy increase interest margins more than profit taxes.
- Current bank levy exempts holdings of government bonds, creating disincentives for private sector credit.
- Reducing the relative size of the asset tax in favor of a CIT-top up is a welcome step; eventual replacement of the bank asset tax entirely in a fiscally neutral manner encouraged.
- Legal Risk:
- High legal risk and uncertainty around lending contracts increase mark-ups.
- Ongoing efforts to create an optional but standard mortgage template consistent with law are encouraging.
- Penalties for contracts not fully consistent with consumer credit law could be made more proportional to the size of misconduct.
- Regulatory changes:
- Authorities proposed a Long-Term Funding Ratio on top of Basel III requirements to encourage more wholesale long-term funding and more fixed rate mortgages.
- IMF view: support objectives but caution that liquidity risks seem reasonably contained and market is rapidly increasing fixed rate mortgages without such a ratio.
- More bond issuance could diversify funding but likely increase credit costs and further hinder financial intermediation.
Reforms to support potential growth (four key areas)
- Regulation:
- Progress on regulatory simplification domestically (Deregulation Task Force) and at EU-level (Omnibus legislation).
- Support a forthcoming “28th regime” — an optional legal framework for all EU firms (company law and accounting) to help firms scale and become pan-European brands.
- Two crucial conditions: regime must be sufficiently ambitious and adopted as a regulation, not a directive.
- Labor — supply and productivity:
- Labor supply: priorities include gradual increases in retirement age and well-integrated immigration; if infeasible, facilitate more part-time work, training for the inactive, and services like child and elderly care.
- Labor productivity: focus on skills and mobility. Poland has the third lowest digital skills in the EU and participation in training is 25% vs 34% EU average.
- Recommendations: increase access and relevance of training with corporate sector, refocus employment services toward matching skills with needs, reduce number of regulated professions (currently the highest in the EU), and support EU proposals to expand automatic recognition of foreign credentials.
- Capital markets — two distinct goals:
- Increase returns on household savings:
- Reduce excessive exposure to real estate and bank deposits.
- Reduce tax preferences for real estate (beyond primary residence), increase participation in third pillar pension funds, increase availability of low-cost diversified investment products.
- Proposed “OKI accounts” could help but must avoid restricting investments to domestic stocks.
- Increase funding for Polish firms:
- Innovate Poland platform could channel institutional savings into alternative investment funds for smaller risky firms.
- For scaling and large/risky investments, pan-European markets are necessary; domestic markets unlikely to provide sufficient size and cost of funding.
- Support for the savings and investments union and forthcoming reform to increase ESMA supervisory powers is critical.
- Energy:
- Deepen the single market for energy; push the EU for a strategic blueprint for an integrated electricity system.
- ETS2 implementation will allow Poland to meet emissions targets with lower cost to output than current regulatory ceilings; cushion impact on households by strengthening the “Clean Air” program.
- Simplify permitting to accelerate new renewables and grid modernization.
Closing
- The mission thanks the authorities and counterparts for constructive engagement.
Source: IMF Staff Concluding Statement of the 2025 Article IV Mission to Poland (November 24, 2025).