Poland's Record Defense Budget Financed by Debt
In 2026, Poland is allocating nearly 5% of its GDP to defense – over 200 billion zlotys, with almost 40% coming from debt issued by the Armed Forces Support Fund. Economists, the Supreme Audit Office (NIK), and the IMF are warning of the risk of a debt spiral, and public debt could approach 70% of GDP as early as 2027.
Historic Level of Military Spending
Poland enters 2026 with a defense budget unprecedented in the history of the Third Republic. 200.1 billion zlotys – equivalent to nearly 48 billion euros and almost 4.81% of GDP – has been allocated to the military. This makes Poland a NATO leader in terms of the share of military spending in gross domestic product, surpassing even the United States. Prime Minister Donald Tusk has declared 2026 "the year of Polish acceleration" and announced the construction of the strongest army in Europe. Defense spending consumes more than one-fifth of the entire state budget – a level unprecedented in Poland's post-war history.
Armed Forces Support Fund – Engine and Risk
The key financing instrument is the Armed Forces Support Fund (FWSZ), managed by Bank Gospodarstwa Krajowego. In 2026, as much as 79.5 billion zlotys – nearly 40% of total defense spending – will come from this fund, which is financed by bond issuance and loans. This means that almost two out of every five zlotys spent on the military come directly from debt.
It is precisely this mechanism that raises serious concerns. The Supreme Audit Office (NIK) warns that the fund was "defectively designed" and, instead of supporting the modernization of the army, may effectively hinder it. NIK calculated that the cost of servicing the FWSZ's debt instruments will exceed 403 billion zlotys by 2035, while planned revenues cover only 12% of this amount. If debt servicing has to be financed from the defense budget, this threatens cuts in equipment purchases and delays in the implementation of operational plans of the armed forces.
Public Debt on a Dangerous Trajectory
Defense spending is just one element of the deepening deficit. The 2026 budget assumes a public finance sector deficit of 6.5% of GDP. According to the European Commission's forecast, public debt will increase from around 55% of GDP in 2024 to nearly 69.2% in 2027. In the longer term, the EC warns that without corrective action, debt could exceed 100% of GDP by 2036.
The International Monetary Fund presents a similar assessment. In its Article IV mission report, the IMF raised its assessment of Poland's sovereign debt risk from "low" to "medium" and recommended a cumulative fiscal adjustment of 4% of GDP by 2030 – two percentage points more than the government's projected path.
Experts Sound the Alarm
The Civil Development Forum (FOR) assessed the draft budget as dangerous due to "excessive spending and runaway public debt." Economists emphasize that defense spending is not the only source of the problem – rising social benefits contribute to the deficit to at least an equal extent. Poland is therefore facing a difficult dilemma: how to maintain its defense ambitions without pushing public finances into a debt spiral that would weaken the country's long-term economic foundations.
After 2026: Slowdown Inevitable?
The paradox of the situation is that even government forecasts assume a clear slowdown in the growth of defense spending after 2026. Experts point out that the current level of spending is financially unsustainable without a thorough fiscal reform. The question that both economists and security analysts are asking is: will Poland be able to build military capabilities quickly enough before debt pressure forces the government to retreat? The answer to this question will determine not only the condition of public finances, but also the country's credibility as NATO's eastern pillar.
