amount of 2% of GDP. Such expenses reduction doesn’t mean the necessity of their real decrease; it
depends on GDP growth. If the real GDP growth In the years 2005-06 exceed 6%, there will be even
possibility of expenditures increase. Therefore changes in public expenditure structure must take place,
what would cause decrease of real expenditures level in some fields.
2. Growth-friendly structure of public expenditures
The government aims at the consolidation of public finance in order to increase the efficiency of the
allocation of public funds. It was to be achieved by putting from the beginning of 2008 into force
solutions provided for in the new public finance act. However, the works on the project submitted to the
Parliament have been suspended. On the other hand, the process aimed at the introduction of the
performance budgeting has been started. The first pilot draft budget in such a system, including certain
general government entities (in particular the ministries and voivodship authorities), was presented in the
draft budget act for 2008.
The efforts aimed at further increase in the EU funds absorption have been continued. Ensuring the funds
for the project financing is one of the main objectives of the draft budget act for 2008 adopted by the
government in September. The emphasis is also put on the implementation of activities included in the
National Reform Programme 2005-2008 (NRP). The government has also begun works on another
programme for 2008-2011. Due to the early stage of the works, the detailed consequences of all new
NRP priorities for the fiscal path are difficult to evaluate at present. However, they should not have a
significant impact on the envisaged general government deficit reduction.
Figure 2 – Rigid expenditure in the state budget707172737475762004 2005 2006 2007% of total expenditureSource: The justification to the draft budget act for 2008.A pro-growth fiscal policy (increasing the share of investment outlays) is hampered by the very high
proportion of so-called legally determined expenditures in the budget. It is hardly possible to allocate
more resources to investment, if nearly 75 percent of the total budget expenditures lie in practice outside
the scope of political decisions. Therefore, room for shaping the fiscal policy is very limited.
From the economic point of view, the rigid component of public finances in Poland increases, rather than
drop, from 2004 onwards, since accession to the EU requires the payment of the membership
contribution, financed by the state budget. However, the funds Poland may obtain the EU in the
framework of the structural funds and Cohesion Fund, largely exceed Poland’s financial obligations
towards the Union and, therefore, the net result of integration with the EU is unequivocally favorable for
the Polish economy. Yet access to the available EU funds depends on finding resources within the Polish
system to co-finance the projects. Thus, from the point of view of public finances (and especially the