Poland: gold reserve plan highlights fiscal pressures

Proposals by Polish policymakers to use valuation gains from the central bank’s gold reserves to finance defence spending highlight the growing strain on the public finances from the large budget deficit. The proposal also points towards a desire to retain autonomy over military purchases rather than rely on EU programmes. That reinforces our view that Polish defence spending will continue to fall heavily on imports and that the fiscal multiplier – and resulting boost to GDP growth – will remain limited.