The International Monetary Fund (IMF) issued a press release on 18 May 2015 containing the concluding statement at the end of discussions in Poland under Article IV of its articles of association.

Poland’s economic growth reached 3.5% in the first quarter of 2015 against a background of increased domestic demand, an improving labor market and better financial conditions. Growth is expected to remain at an annual rate of 3.5% for the whole of 2015 and into the medium term.

Following strong consolidation efforts the fiscal deficit is expected to be reduced to around 2.75% of GDP in 2015. The IMF considers that a medium term objective of a structural deficit of 1% of GDP is appropriate but would require additional measures amounting to around 1% of GDP. In addition to identifying expenditure savings another important measure the government can take is to reduce the large value added tax (VAT) revenue gap.

Statistics compiled by the European Union EU show that Poland’s VAT revenue gap measured by comparing the VAT total tax liability (VTTL) to VAT collected has consistently been above the EU average and was estimated at 25% in 2012. A proportion of this gap is considered to be due to illegal practices involving the fictitious export and import of goods. There is therefore scope to raise further government revenue by enforcement and collection measures to further reduce the VAT gap.

The IMF also recommended that resources should be deployed to higher productivity sectors. This could be achieved by promoting innovation, encouraging greenfield investment and targeting education and training to employer needs.