Poland to Seek EU’s Leniency in Deficit Cut Talks After Floods

(Bloomberg) -- Poland will ask the European Commission to adjust its recommendations for budget deficit cuts in the coming years due to rebuilding costs after floods hit the country’s southwest, Finance Minister Andrzej Domanski said.

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The European Union’s executive has already reprimanded the government in Warsaw for breaching the bloc’s deficit limit of 3% of economic output in 2023 and is likely to recommend cuts, which Prime Minister Donald Tusk wants to avoid ahead of presidential elections next year.

Domanski said he will try to convince the commission during the talks next week that Poland requires some leniency because it’s spending a lot on defense and now faces the fallout from floods.

Before the water inundated towns and cities in the southwest this week, Poland was planning another budget deficit of more than 5% next year.

“I will fight for this path of fiscal adjustment or deficit reduction in subsequent years to be as mild as possible ,” Domanski told TVN24 broadcaster on Friday.

The minister welcomed the EU’s decision to unlock €5 billion ($5.6 billion) for Poland’s regions hit by the flooding, saying the money should be available within weeks.

“It will give our budget a lot of breathing space, so hopefully we won’t have to incur significant additional budget expenses,” he said.

The Finance Ministry put aside 2 billion zloty ($522 million) from the budget for immediate relief to those affected by the disaster, although the amount will “certainly be higher” in the end, according to Domanski.

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