The list of legislative works included information on work on the draft amendment to the Budget Act for 2024 on Friday.
“Due to the need to update the state budget revenue forecast and, consequently, change the level of the maximum deficit specified in the Budget Act for 2024, it is necessary to amend the Budget Act of January 18, 2024.” – informed.
Amendment to the Budget Act
The Ministry of Finance is responsible for preparing the draft amendment to the budget for this year.
Minister of Finance Andrzej Domański informed last week at the European Congress of New Ideas in Sopot that the ministry is very close to deciding on a possible amendment to the budget for 2024. He pointed out that the realization of revenues from VAT, CIT and CO2 emission rights was lower than planned.
The head of the Ministry of Finance explained in the context of the potential amendment that the lower implementation of VAT revenues to the budget compared to the plan in the current year results from lower forecast inflation than originally assumed in the budget for 2024 (6.6% vs. 3.7% currently), as well as from lower retail sales dynamics. The minister emphasized that VAT revenues are growing double-digitly from month to month and there is no y-o-y decline in this category, only lower implementation compared to the plan.
Domański also pointed out that prices of CO2 emission allowances are lower than expectedwhich means a loss of almost PLN 8 billion for the Ministry of Economy compared to the plan.
Why the change in the Budget Act?
The head of the Ministry of Finance also drew attention to lower CIT revenues, mainly due to the condition of exporters. “In CIT – there are some one-off events (…) like Orlen, but what really worries me is the condition of the euro zone countries. We can see what is happening from the exporters. Relatively strong zloty – we see the ECB cuts rates, the Fed cuts, and in our case rates interest rates are unchanged. I do not evaluate the NBP’s policy, but this translates into the fact that the zloty is strong, and this does not help exporters. The latest reading of Germany’s GDP at the level of 0.3% y/y in Q2 does not help them either 0.6% in the euro zone, it just hurts. Then we see it in CIT,” he said.
Due to the flood, Andrzej Domański signaled at the end of September that the probability of amending the budget for this year has significantly increased.
In mid-October, the Ministry of Finance announced in the estimated implementation of the budget for the period January-September, the revenues amounted to PLN 460.2 billion, i.e. 67.4 percent plan, expenses – PLN 567.5 billion (65.5%), and the deficit – PLN 107.3 billion (58.3%)..
According to the Budget Act for 2024, state budget revenues are to amount to PLN 682 billion and expenses to approximately PLN 866 billion. In turn, the deficit was planned to amount to no more than PLN 184 billion.
Budget Amendment Shenanigans – Because Who Needs Planning, Right?
Ah, the Budget Act! It’s like the holiday season of finance—everyone’s got their list, and they definitely, absolutely will check it twice! But alas, the Ministry of Finance has decided it’s time for a little amendment to that lovely draft for the year 2024. Oh, and spoiler alert: it seems like the ‘revenue forecast’ has taken a hit. I mean, who could have seen that one coming? (Raises hand—oh wait, it’s just me.)
What’s Cooking in the Budget Kitchen?
So, Minister Andrzej Domański was at the European Congress of New Ideas trying to impress everyone with the ‘very close’ discussions about proposed changes. Just to clarify—to update our dear state budget’s romance with revenue forecasts, we need to amend the Budget Act of January 18, 2024. Brief yet poetic, isn’t it?
Now, let’s take a gander at what the good minister described—lower revenues from those oh-so-fun taxes like VAT and CIT—talk about a nightmare on finance street! Apparently, the planned VAT revenue is about as reliable as my New Year’s resolutions. Mind you, last year’s inflation forecasts and the current state of retail sales aren’t giving us much hope either. It’s like they looked at the budget, shrugged, and thought, “Hey, let’s not actually hit any targets this year!”
Why the Change in the Budget Act?
So why this sudden need to play with numbers? Well, according to our financial Captain Obvious, it seems that our dear exporters are doing a lot worse than predicted. The stability of the euro zone isn’t exactly showering us with favorable economic weather. And with the zloty having the audacity to be surprisingly strong, exports are suffering like a contestant on a bad reality show.
Let’s not forget the hilariously tragic story of CO2 emission allowances—turns out, they’re now like a bad investment; lower than expected prices translate to a staggering loss of nearly PLN 8 billion. Oops! Again, who could possibly foresee this? (Pause for dramatic eye-rolling.)
What Lies Ahead?
With the clock ticking down, revenue projections are at PLN 682 billion, expenses are around PLN 866 billion, and don’t even get me started on that deliciously high deficit—planned at max PLN 184 billion. It’s like watching a train wreck in slow motion; you can’t look away, but you know it’s going to be ugly.
So there you have it, dear friends—more twists and turns in the Budget Act than in a low-budget thriller movie. As we watch the Ministry undulate between promises and reality, one thing is for sure: budgeting can be a real laugh—if only the stakes weren’t so high!
Now, if anyone still believes in fairies and predictable financial forecasts, maybe it’s time to reassess. Or pack your bags and join me at the nearest comedy club—let’s laugh away our fiscal woes together!
Into a crystal ball and saw nothing but clouds of uncertainty.
Exports and the Euro Zone Blues
Foreign exchange rates and export conditions have been dancing a precarious tango. The strong zloty, a blessing for some, has turned into a curse for our exporters, who are feeling the pinch from sluggish growth in the euro zone. With Germany barely scraping by with a GDP growth of 0.3% y/y in Q2, and the broader euro area at 0.6%, it’s no surprise that our exporters are anxious. Poor performance in our neighboring economies is bound to ripple through our own financial waters, and the Ministry is taking note of this concerning trend in corporate income tax (CIT) revenues.
What About the Budget Deficit?
Moving on to the budget numbers, the facts don’t lie: from January to September, state revenues clocked in at PLN 460.2 billion, running at 67.4% of the planned amount, while expenses were slightly under at 65.5% of the budgeted PLN 567.5 billion. The minister is now raising eyebrows around an alarming deficit of PLN 107.3 billion, which is 58.3% of what’s been forecasted. Guess what? With such performances, it seems that the upcoming budget amendment isn’t just a suggestion; it’s a necessity to right the fiscal ship.
Plans for 2024 – Wishful Thinking?
As we step into the future, the 2024 Budget Act hopes to gather state revenues amounting to PLN 682 billion with a spending spree of around PLN 866 billion. But wait, folks—let’s not forget the deficit positioned at a rather optimistic PLN 184 billion. Let’s hope we’re not setting ourselves up for a fiscal hangover come next party season!
financial planning seems a bit like a game of Jenga: one shaky decision, and down it all comes! With budget amendments on the horizon, we’ll be watching to see how the Ministry of Finance navigates these turbulent waters. Fingers crossed for a sturdy fiscal future!
The budget deficit is like that uninvited guest who shows up to the party and refuses to leave. With projections suggesting a maximum deficit of PLN 184 billion, the situation is precarious. The state’s attempt to balance the budget is akin to a tightrope walker juggling flaming torches—one mistake, and the whole act could go up in smoke!
Given the current revenue woes, the planned revenues of PLN 682 billion seem like a distant dream. The expenses, on the other hand, are creeping up to PLN 866 billion, making the financial picture more alarming. The ongoing tussle between income and expenditure reveals that without substantial adjustments or a miracle (perhaps a fairy godmother?), achieving a balanced budget is becoming increasingly elusive.
Understanding the deficit’s implications is crucial. It affects not just government spending but impacts public investment, social programs, and economic growth strategies. As deficit levels rise, the government may face pressure to cut back on vital services or re-evaluate its long-term fiscal policies. There’s also the looming specter of increased borrowing, which could further complicate matters, potentially dragging the economy into a deeper mire of debt and financial uncertainty.
the budget deficit is not merely a number on a piece of paper—it’s a significant indicator of economic health, with repercussions that can influence everything from public welfare to the stability of financial markets. It’s essential to keep a close eye on this evolving narrative as the Ministry of Finance navigates these choppy waters in the coming months.
