Due to the fact that members of the Monetary Policy Council (MPC), delegated to it by the Senate of the Opposition, have provided false information in public statements and publications that the proposal to increase child benefits under the “Family 500 plus” from PLN 500 to PLN 800, would raise inflation in our country by as much as 2 percentage points, the president of NBP, Andrzej Glapiński, decided to issue an official communiqué on the effects of the program proposals of the ruling party and the largest opposition party, the Platform.
Program proposal costs
The assessment of the election proposals of both parties was based on calculations by NBP econometricians, using the NECMOD model used by this bank and other central banks.
According to the calculations of NBP experts, the estimated cost of 4 PiS proposals (increase of child benefit from PLN 500 to PLN 800, free medicines for children, youth and over-65s, free highways and a secure 2% housing loan) will be approximately amount to PLN 27 billion per year.
An increase in childcare allowance costs about PLN 25 billion, free medicines are financed from the budget of the National Health Fund, so there are no additional expenses on this account, free highways cost about PLN 0.2 billion, and finally a secure loan will cost about PLN 0, PLN 9 billion in 2024 and PLN 1.1 billion in 2025.
According to these calculations, the total impact of the PiS proposal on inflation will be only 0.1 pp. percentage point in 2024 and 0.3 pp. percent in 2025 and could increase the public finance deficit by 0.6 percent. GDP in 2024 and 0.5 percent. GDP in 2025 and public debt by 0.5% and 0.5% respectively. GDP and 0.7 percent. GDP.
The Platform’s program proposals (increasing the childcare allowance from PLN 500 to PLN 800 as of June this year, increasing the tax-free allowance, the so-called grandmother allowance and rent allowance) were in turn estimated to total approx. PLN 88-93 billion per year in 2024-2025.
And so the increase in childcare allowance from June will be an additional PLN 14 billion, the increase in the free allowance to PLN 60,000. PLN, it costs about PLN 45 billion, a year later as much as PLN 48 billion, the so-called PLN 9 billion and rent subsidies amount to PLN 6 billion.
The total impact of these proposals on consumer inflation is 0.3 pp. percentage point in 2024 and 0.8 pp. percent in 2025, to the public finance deficit of 1.9 percent. GDP in 2024 and 1.6 percent. GDP in 2025, and another 0.4 percent. GDP in 2023 and public finance debt by 1.7% and 1.7% respectively. GDP, 2.5 percent GDP and in addition this year by 0.3 percent. GDP.
Influence on inflation
These estimates prepared by NBP experts clearly show that the impact of the Platform’s proposal on consumer inflation would be approximately 3 times greater than in the case of the PiS proposal, and would be similar in the case of the deficit of the public finances and public finance sector debt.
The leader of the PO, Donald Tusk, who was a staunch opponent of the “Rodzina 500 plus” program for years, now suddenly not only became a supporter, but also wants to pay the increased childcare allowance immediately from 1 June this year.
Similarly, with the increase of the tax-free amount, during his rule of 7 years, this amount was increased by only PLN 2 from PLN 3,089 to PLN 3,091, and only the PiS government increased it 10 times to PLN 30,000. PLN and suddenly Tusk even wants to increase it to 60,000. zloty.
so-called Grandma’s is an attempt to imitate the government’s care capital introduced by the PiS government (PLN 12,000 for the second and each subsequent child), and the 0% loan and rent subsidy is an attempt to boost the PiS government’s housing program government copy, which will come into force on July 1 this year.
In this way, after 8 years, Tusk and the PO not only agree with PiS on the introduction of numerous social programs, although they previously opposed it, now they are unexpectedly trying to “glue” to it.
Moreover, they do it irresponsibly and try to outbid them with proposals that would destabilize public finances on the one hand and clearly increase inflation in our country on the other.
Source: wPolityce