Poland’s Budget After H1 2026: Revenue Lags, Deficit Hits PLN 123.7bn

Revenue Below the Implied Half-Year Pace

Formally, after six of the year’s twelve months, budget execution might be expected to be close to 50% of the annual plan. In practice, however, tax receipts and government expenditure are never distributed evenly throughout the year. Nevertheless, the revenue result of 43.1% indicates that the first half of 2026 was not particularly generous to the state budget. Tax revenue reached 42.3% of the annual plan, amounting to PLN 245.0 billion out of a planned PLN 579.9 billion, while non-tax revenue reached 51.0%, or PLN 32.5 billion out of PLN 63.6 billion.

Among tax revenues, indirect taxes performed best. VAT and excise duty generated a combined PLN 208.6 billion, representing 46.2% of the planned PLN 451.3 billion. Excise duty alone reached 42.6% of its annual target, amounting to PLN 44.0 billion. Corporate income tax, or CIT, reached 56.1% of the annual plan, generating PLN 45.1 billion out of a planned PLN 80.4 billion. This was the highest execution rate among the main taxes and may suggest that companies paid relatively more advance tax payments during the first half of the year than assumed in the full-year plan.

Why the Negative PIT Figure Does Not Mean a Collapse in Revenue

The most unusual item in the statement is personal income tax. Against a full-year plan of PLN 32.0 billion, the result after the first half of the year was PLN -18,775.5 million, meaning that the central government budget recorded a negative figure under this category. The Ministry of Finance explains this in a footnote to the table. The figure reflects a reduction in central government revenue resulting from PIT and CIT shares transferred to local government units for the January–June period, in accordance with the Act on the Revenue of Local Government Units of 1 October 2024. The total amount transferred was PLN 132,938.2 million.

Expenditure: Local Government Transfers Are Using Their Allocations Faster Than Other Categories

On the expenditure side, execution of the annual plan reached 43.8%, with spending of PLN 402.4 billion out of a planned PLN 918.9 billion. This was close to the pace of revenue execution, although there were substantial differences between individual categories. General subsidies for local government units had already reached 58.6% of the annual plan, amounting to PLN 30.9 billion out of PLN 52.7 billion. This was the highest execution rate among the listed expenditure categories. Subsidies for the agricultural Pension and Disability Fund reached 50.6%, or PLN 13.9 billion out of PLN 27.6 billion, while settlements with the EU general budget in respect of own resources reached 50.1%, amounting to PLN 19.8 billion out of PLN 39.6 billion.

Spending on servicing State Treasury debt progressed much more slowly than the halfway point of the year, reaching 37.4% of the annual plan, or PLN 33.7 billion out of PLN 90.0 billion. Subsidies for the Social Insurance Fund reached only 33.4%, amounting to PLN 30.3 billion out of a planned PLN 90.8 billion. In both cases, lower execution during the first half of the year does not necessarily mean full-year savings. The schedules for interest payments on government debt and transfers to the Social Insurance Fund may be unevenly distributed throughout the calendar year.

How the Deficit Was Financed

The state budget deficit after the first half of the year amounted to PLN 123.7 billion, representing 45.5% of the PLN 271.7 billion limit established for the whole of 2026. This was accompanied by a negative EU funds budget balance of PLN 15.6 billion, equivalent to 43.0% of the planned deficit of PLN 36.2 billion. Total borrowing requirements were financed to the equivalent of 45.2% of the annual plan, amounting to PLN 139.3 billion out of PLN 307.9 billion. The financing structure was clearly weighted towards domestic sources.

Domestic financing had already reached 89.3% of the annual plan, amounting to PLN 125.1 billion out of PLN 140.1 billion. In practice, this means that during the first half of the year the government covered the substantial majority of its planned annual borrowing requirements from the domestic market. This included bond sales of PLN 165.7 billion, representing 77.6% of the annual plan, as well as PLN 96.3 billion in funds carried over from the previous year. The latter figure was equivalent to 344% of the amount originally planned under this category. The Ministry of Finance uses an asterisk for certain other items where the percentage indicator exceeds 1,000%. Foreign financing, by contrast, reached only 8.4% of the annual plan, amounting to PLN 14.1 billion out of PLN 167.8 billion. The largest remaining financing reserve for the second half of the year is therefore on the foreign financing side.

Table: Domestic Financing Sources in Detail (PLN million)

Note: The Ministry of Finance states that the figures were rounded according to standard arithmetic rules. As a result, the sum of the rounded components may differ slightly from the reported totals.

Data source: Ministry of Finance, State Budget Department, “Preliminary Data on State Budget Execution for January–June 2026” and the accompanying graphic material, Warsaw, 15 July 2026. Own analysis based on Ministry of Finance data.