Poland’s 2026 Draft Budget Sets Record Spending, Debt Levels to Rise

Poland’s 2026 Draft Budget Sets Record Spending, Debt Levels to Rise

Poland’s government has approved a draft state budget for 2026 along with new legislation to support its implementation and a medium-term borrowing plan. The package points to record public spending on defence, health care and social support, while at the same time projecting higher levels of debt.

The budget sets out total revenues of about PLN 647 billion and planned spending of PLN 919 billion, leaving a shortfall of PLN 272 billion. Under the official national measure, public debt is expected to climb to just under 54 percent of GDP in 2026, while using European Union definitions the figure could exceed 66 percent. The forecasts assume Poland’s economy will expand by around 3.5 percent next year, with inflation averaging 3 percent and unemployment near 5 percent by December.

The largest single increase is in military funding, which will reach more than PLN 200 billion, roughly 4.8 percent of national output. Health care will also receive a record allocation of PLN 248 billion, including expanded financing for fertility treatment and new crisis support lines. Social policies continue to take up a major share of the budget: the Family 800+ benefit is expected to cost nearly PLN 62 billion, while two extra annual pension payments will total about PLN 32 billion. Additional commitments include pension indexation of roughly PLN 22 billion, a higher funeral benefit, new housing subsidies, and support for maritime training and research.

On the revenue side, the government expects stronger tax receipts, particularly from consumption and corporate taxes. Value-added tax is forecast at PLN 342 billion, while income from excise duties is projected at PLN 103 billion, partly due to higher levies on alcohol, tobacco and electronic cigarettes. A new electronic invoicing system is scheduled to roll out in 2026, which authorities say will help reduce tax evasion.

The accompanying legislation includes modest salary increases for teachers at the start of their careers and managers of state companies, as well as provisions allowing greater flexibility in responding to emergencies such as natural disasters or security threats.

The debt strategy for 2026–2029 aims to ensure borrowing needs are met while keeping financing costs in check. It also pledges to maintain the credibility of the government bond market.

The draft budget highlights the government’s priority of maintaining high levels of social and defence spending, but it also reflects the cost of those choices in terms of growing debt. For households, the measures mean continued support programmes and higher pensions, while for the economy as a whole they signal more pressure on public finances in the years ahead.