Polish public debt reached 1 trillion Polish zloty (around $246 billion) this month, as shown by the public debt clock in Warsaw that was launched in 2010 by Polish Atlas Network partner Civil Development Forum (FOR). That debt now represents almost 54 percent of the country’s GDP — approximately the same proportion as in early 2014, before Poland’s prior administration seized half of the assets held in private pension funds in order to alleviate public debt. FOR opposed that drastic seizure, which only temporarily lowered public debt and increased future pension liabilities.
FOR’s opposition to Poland’s pension seizure was featured as part of Atlas Network’s 2014 campaign “Today’s Berlin Walls,” which showed how many modern obstacles to liberty can seem just as permanent and imposing as the wall that used to separate East and West Germany — until the hard work and dedication of freedom advocates brings them crashing down.
The level of public debt in Poland in relation to GDP is still growing despite the country’s relatively good economic situation, with lower unemployment and growing tax revenues. Globally low interest rates have decreased the cost of servicing Poland’s public debt, which provides cover politicians as they continue their runaway spending.
Rather than bringing public finance under control, the current government is implementing new and costly welfare programs and increasing other public expenditures, such as lowering the official retirement age at the same time the majority of European Union countries are increasing it. Poland’s constitution limits public debt to 60 percent of GDP, so if the relatively good economy comes to an end, there is limited room for politicians to maneuver.
“FOR emphasizes that politicians should lower debt and move towards a balanced budget or surpluses in good times to lower vulnerability of the Polish economy to external and domestic economic shocks,” explains Marek Tatala, FOR vice president. “We need stronger pressure by taxpayers so FOR builds awareness about public debt.”
FOR held a press conference in front of the debt clock at its 1 trillion zloty milestone.
A public debt level that stands at 54 percent of GPD may seem low in relation to many other developed countries. Tatala points out, however, that Poland is still not as developed as Germany, for instance, with public debt representing 68 percent of its GDP. This means that Poland’s “safe” level of debt, from the perspective of fiscal and financial stability, is lower than for other developed countries. A more apt comparison would be to other regional countries within Central and Eastern Europe, where only Croatia, Slovenia, and Hungary have higher public debt in relation to GDP than Poland.
First Panel (Past)
King: “Son, one day this will all be yours.”
Second Panel (Today)
Son: “Public debt reached 1 trillion Polish zloty, which is more than 26,000 zloty per citizen.”
Father: “Son, one day this will all be yours.”
To build awareness about public debt and growing ratio of debt to GDP in Poland, FOR organized a special event and press conference with Leszek Balcerowicz, founder of FOR and former minister of finance; Andrzej Rzonca, FOR’s chief advisor and former member of the Monetary Policy Council; and Aleksander Laszek, FOR’s chief economist. FOR’s team has also been distributing comic-book leaflets containing a story about public debt in the style of FOR’s “Econ-Comics."
FOR also distributed a small mirror that reflects the taxpayer’s face, inscribed with the reminder, “Who will repay public debt?” The idea, Tatala explains, is to remind people of the words of former British Prime Minister Margaret Thatcher, who said, “If the State wishes to spend more it can do so only by borrowing your savings or by taxing you more. It is no good thinking that someone else will pay — that ‘someone else’ is you. There is no such thing as public money; there is only taxpayers’ money.”
The FOR debt clock in Warsaw received Atlas Network’s Templeton Freedom Award in 2011, in the “Special Achievement by a Young Institute” category. The clock was updated in 2013 to include implicit public debt, which incorporates government liabilities such as loans, bonds, and obligations for future expenditures like pensions. When the public debt clocks was originally launched by the Civil Development Forum in September 2010, it showed 724 billion zloty.