Polish finance ministry expects to exceed debt limits in 2026 and 2027

(Reuters) - Poland's general government debt is forecast to rise to 60.6% of gross domestic product (GDP) in 2026 and to 63.2% in 2027, according to the finance ministry in a report published on Monday, exceeding a constitutional limit of 60%.

Prime Minister Donald Tusk's government said in a white paper on the state of public finances in 2016-2023 that the previous ruling party's policies have muddled public finances and put the country at risk of exceeding debt limits.

"In recent years, taxes have increased markedly, the rationality of spending funds has decreased, and the public debt according to the European Union methodology found itself on track to exceed the 60% of Gross Domestic Product (GDP) threshold," the ministry states in the paper.

It pointed to a surge in out-of-budget spending since 2020, bypassing a rule to stabilise expenditure, and a steady rise in the VAT gap since it bottomed out in 2021, among other factors.

"The first corrective actions have already been taken, but the scale of irregularities, omissions and errors is so large that repairing Polish finances will take at least several years," the finance ministry said in a press release.

Polish finance minister Andrzej Domanski told journalists the government would take steps to increase the transparency of its public finances, including establishing a fiscal council to monitor government policy.

Three representatives of the previous ruling Law and Justice (PiS) party were not immediately available for comment.

(Reporting by Karol Badohal and Anna Wlodarczak-Semczuk; Editing by Kirsten Donovan)