Public Expenditure in Poland: Major Trends,Challenges and Policy Concerns

This article surveys the behaviour of public expenditure in Poland. The analysis is conducted against a theoretical background outlining the basic government functions and possible government failures in a market economy. The first part provides an overview of major trends in public expenditure during systemic transformation in Poland. It also highlights the reprioritisation of government objectives in channelling budgetary funds. The second part gives an account of the most salient consequences of the changing pattern of public expenditure and discusses the main policy concerns involved, pointing out the adverse macroeconomic effects of government failure to create or enhance positive externalities for business. The last part outlines the most significant future challenges, with special emphasis on the implications of the public finance crunch that emerged in mid-2001. It also argues that two 'external' factors, globalisation and the forthcoming EU accession, will gain importance in the future in shaping public expenditure in Poland.