Leszek Balcerowicz warns at EEC 2025: Huge budget problem, we are facing a catastrophe

• Leszek Balcerowicz believes that socialism, or the power of politics over the economy, has never worked anywhere. Poland, in his opinion, cannot be an exception.
• The former deputy prime minister emphasises that capitalism based on orders given over the telephone cannot be tolerated in our country.
• Balcerowicz warns that if we do not limit social spending, we will be threatened with the Greek model in the future; we already have high costs of servicing our debt.

The Polish economy, despite the mistakes made by politicians, has developed rapidly in the last ten years compared to other European Union countries. However, this was largely done on credit, and now we have a problem with an excessive budget deficit.

- Over the last ten years, Poland has developed faster than most Western European countries, despite pursuing poor economic policies. However, social spending has increased enormously during this time. No privatization has taken place during this period. In Europe, alongside Turkey, we have the largest share of GDP generated by state-controlled companies - said former Deputy Prime Minister and Minister of Finance Leszek Balcerowicz, who participated in the EEC Talks series at the 17th European Economic Congress .

High level of social spending and budget problems

- In Poland we have huge problems with the budget , because we have a high level of social spending, which is not fully justified. This cannot be maintained in the long term. Greece paid a high price for pursuing a populist policy a few years ago. The question now is whether we are waiting for a catastrophe or whether it will be possible to solve certain matters sensibly earlier - added Leszek Balcerowicz

He pointed out that when it comes to attitudes towards the market economy and private property, Poles come out best in Europe in the surveys. That is, it is not the case that we have a socialist mentality that "cynical politicians prey on".

- However, politicians from the largest parties do not seem to notice this, do not pay attention to it, which is why they believe that the state must be present in the economy - said Leszek Balcerowicz.

We will pay for the security of our country ourselves - that is obvious. However, the order of magnitude we are talking about is important. On average, about 1 percent of GDP is spent on armaments in the West. In Poland, we spend more - over 4.5 percent.

- Our budget expenditures constitute about 50% of our GDP. So what makes up this overwhelming majority? First of all, education and healthcare. We cannot blame defense expenditures as the most burdensome for the budget. If we increase expenditures on defense, we must save on something else . The main Polish problem is that politicians do not see how increasing social spending affects the costs of servicing the debt. In the end, it is the economy that verifies everything. How? The rising costs of debt are already a fact. In Poland, we pay 6% for 10 treasury bonds, and in the euro zone it is about 3% - noted Leszek Balcerowicz.

The main tool of state capitalism is the telephone in the hands of politicians

- We have different versions of capitalism, but the one that does not work is the one based on a solution in which the main tool used by politicians is a telephone, and the voice in the receiver says that you have to do "this and that". And the president knows that he has to do it, because otherwise he will be dismissed - summed up Leszek Balcerowicz.