Poland's Strategic Shift: Navigating EU Recovery Loans
Poland will reduce its intake of EU Recovery Funds by 21.5 billion zlotys to manage financial deficits and focus on grants. The decision follows negative ratings affecting fiscal consolidation, with looming deadlines for fund utilization amid past democratic standard issues with the EU.
In a strategic move, Poland has decided to slash its borrowing from the European Union's Recovery and Resilience Facility by 21.5 billion zlotys ($5.87 billion), according to the Funds and Regional Policy Minister. This comes as the nation struggles to regain financial stability after credit downgrades due to high deficits and debt.
The urgency is compounded by a fast-approaching August 2026 deadline to utilize the EU funds, which had been delayed due to disagreements with Brussels over democratic principles under the former Polish administration. With time running short, the focus has now shifted to fully capitalizing on available grants while treating the loans as an optional backup.
Despite this retrenchment, Poland will still make substantial use of the loans, mainly channeled to businesses and local administrations for long-term projects. Finance Minister Andrzej Domanski highlighted that the country's debt-to-GDP ratio would hit 66.8% by 2026, potentially decreasing to 63.7% accounting for these loans.
(With inputs from agencies.)
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