Proceedings of the 70th International Academic Conference, Madrid

PUBLIC FINANCES IN POLAND IN 2020–2025 IN THE LIGHT OF THE CONCEPT OF FISCAL GOVERNANCE: A THEORETICAL MODEL AND EMPIRICAL ANALYSIS

ANETA KARGOL-WASILUK

Abstract:

The aim of this paper is to analyze public finances in Poland over the period 2020–2025 within the framework of the concept of fiscal governance. The study develops an original theoretical model that explains the relationship between the quality of fiscal institutions, the design and enforcement of fiscal rules, crisis-related shocks, and the fiscal outcomes of the state, measured in terms of budget balance and public debt dynamics. The empirical analysis covers a period characterized by unprecedented fiscal disturbances, including the COVID-19 pandemic, the energy crisis following 2022, a significant increase in defense expenditure, and an expansion of social transfers. These overlapping shocks provide a relevant context for evaluating the resilience and effectiveness of fiscal governance mechanisms in an EU member state. The paper tests four hypotheses concerning: (i) the effectiveness of fiscal rules in constraining fiscal deficits, (ii) the impact of institutional transparency and fiscal oversight on public debt accumulation, (iii) the role of extraordinary crisis factors in driving short-term fiscal deterioration, and (iv) the extent to which post-crisis expenditure pressures weaken the stabilizing function of fiscal rules. The results of the study indicate that, although formal fiscal governance frameworks are present and aligned with European Union requirements, their practical effectiveness in Poland remains limited. This limitation stems primarily from institutional weaknesses, the proliferation of off-budget fiscal operations, and a structural increase in public expenditure. The findings suggest that fiscal rules alone are insufficient to ensure long-term fiscal discipline in the absence of strong, transparent, and independent fiscal institutions. Overall, the study concludes that fiscal governance in Poland during the analyzed period is largely formalized but only partially functional, with significant gaps between institutional design and actual fiscal outcomes.

Keywords: fiscal governance, public finance, budget deficit, public debt, fiscal rules, Poland, institutional economics.

DOI: 10.20472/IAC.2026.070.007

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