Polish Ruling Party Announces $10 Billion Election-Year Stimulus

(Bloomberg) -- Poland’s ruling nationalists unveiled plans to boost subsidies for families and spending on pensions as part of an election-year stimulus package worth as much as 40 billion zloty ($10.5 billion).

A series of scandals involving the Law & Justice party has weakened its support in recent months, opening the door to the pro-European opposition in a general election due late this year as well as a ballot to the European Parliament slated for May. Poland’s 5.1 percent economic growth last year helped reduce the budget deficit to below 1 percent of gross domestic product -- a record low -- providing some room for fiscal expansion.

“We know how to finance this great program -- this 30 billion to 40 billion zloty per year,” Prime Minister Mateusz Morawiecki told a party convention in Warsaw on Saturday. Measures will include improving the tax system and support continued strong economic growth, which will allow Poland to catch up to western European living standards within several decades, he said.

Party leader Jaroslaw Kaczynski, whose hand-picked government has been sued by the European Union for seriously damaging the rule of law, told the gathering that pensioners will get an additional payment of 1,100 zloty in April, which will be repeated in 2020 and 2021. New benefits for families’ children are set to kick-in from July.

Law & Justice wants to reduce the tax rate for workers under 26 years old as well as to trim personal income taxes, although details weren’t immediately available. Furthermore, it wants to spend “billions” of zloty to improve public transport in rural areas, Kaczynski said.

The stimulus plan comes after Donald Tusk, a former two-time Polish prime minister and the country’s highest-ranking EU official ever, called on his countrymen this week to form a wide pro-European movement capable of ousting Law & Justice. While talks are under way to build a wide coalition of opposition parties, most opinion polls show the ruling party holding on to power, either alone or with a potential partner in this year’s general election.

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