Poland39;s deficit needs to come down to stop debt from rising
Stronger economy argues for fiscal tightening sooner, not later
Encouraging that Poland is looking to redesign its fiscal rule

BUDAPEST, June 11 Reuters Poland should set a very high bar for more fiscal loosening given rising expenditure needs related to infrastructure, climate risks and security costs driven by the war in Ukraine, a senior International Monetary Fund official said.

Prime Minister Donald Tusk39;s proEuropean Union government hiked public sector pay, social benefits and the minimum wage sharply this year to build credibility with voters after eight years of rule under the nationalist Law and Justice party PiS.

The European Commission forecasts Poland39;s budget deficit will rise to 5.4 of gross domestic product this year, among the highest in the European Union, with the shortfall on track to exceed the EU39;s 3 of GDP threshold next year.

Poland39;s current fiscal deficit is large and will need to come down over time, both to eventually stop public debt from rising and to comply with new EU fiscal rules, Geoff Gottlieb, the IMF39;s Senior Regional Representative for Central, Eastern and SouthEastern Europe told Reuters.

A strengthening economy and abovetarget inflation would be two factors that would argue for tightening sooner rather than later.

Poland, which spent nearly 4 of GDP on defence last year, twice NATO39;s 2 guideline, announced a 10 billion zloty 2.49 billion programme…