Poland needs reforms to keep up economic success, IMF officials say

Poland's economic transformation in recent decades is remarkable, but it needs reforms to sustain growth, International Monetary Fund (IMF) officials told Reuters.

"Poland is one of the great economic growth success stories in the world over the last 30 years," Geoff Gottlieb, IMF senior regional representative for Central, Eastern and South-Eastern Europe, said in a interview last week.

Poland's still-low public debt level, strong track record on economic growth and an appropriately ambitious amount of fiscal consolidation over a short period, as pledged by the government, all boosted the country's fiscal credibility, Gottlieb said.

Earlier this month Poland said it would rein in its budget deficit to below the European Union limit in 2028, and its debt to gross domestic product (GDP) ratio in 2030.

"We think that the amount of adjustment should just be more front-loaded when growth is strong, when inflation is still high and to establish credibility about the whole package," Gottlieb said.

"It's always economically and even politically easier to do fiscal adjustment when growth is high."

The IMF forecast Central Eastern Europe's biggest economy expanding 3.5% next year while Poland assumes 3.9% growth in 2025, up from 3.1% expected in 2024.

Any extra revenue in the 2025 budget, Gottlieb said, should be saved to lower the deficit more than targeted.

However, IMF officials cited headwinds to medium-term growth.

"We have this strong growth record going back. Convergence is happening, has been happening, but it also means that there is less catching up left. So it will be harder to grow as much going forward," said Jan Kees Martijn, IMF mission chief to Poland, in the interview. Helping banks offer credit to corporations is a challenge, he added.

He also cited the aging population, military spending and necessary climate investments as key pressures on the budget, noting that the IMF was focused on maintaining fiscal sustainability.

One solution would be to better target Poland's universal social benefits, including the previous government's flagship 800 zloty ($200.39) monthly child allowance and electricity price cap, the IMF officials said.

Following an official staff visit to Poland, the IMF in a report last week also recommended raising income, property and value added taxes towards levels in other EU countries, as well as aligning the retirement age for men and women and adjusting it over time in line with longevity.