Poland prepares to issue emergency debt as Ukrainian refugees flood in
The Polish government is drawing up plans for emergency fundraising as more than 3.5 million Ukrainian refugees strain its public finances.
Special debt to prevent chaos in public services is to be issued next year under proposals to ease the pressure being considered in Warsaw.
The Polish government hopes to tap into the boom in demand for “ethical” investments by issuing so-called social bonds which have a lower interest rate, the head of the Warsaw Stock Exchange told The Telegraph.
Discussions have taken place between the Polish government and the stock exchange on a sale of bonds and debt will be an offer similar to green bonds issued by governments. The money raised would be intended to help offset the additional costs of the refugees.
More than 3.5 million Ukrainian refugees have moved to Poland after many of its settlements were devastated by Russian attacks. Poland has taken in more Ukrainian refugees than any other country, but this comes at additional costs as those who flee increase pressure on aid and public services.
Marek Dietl, managing director of the Warsaw Stock Exchange, said the government was considering “social bonds to help refugees” at lower borrowing costs.
He said: “Green bonds pay you less but you feel like you’ve done something good for the planet and now hopefully there will be the Polish social bond issue.”
Mr Dietl said the Polish government had already secured between 70% and 80% of its funding for this year, but would likely need social bonds in 2023.
More than half of Ukrainian refugees have been hosted by Poland, a country of 38 million people. Ukrainians have also fled to Romania, Russia, Hungary and Moldova since the invasion, according to the United Nations.
Mateusz Urban, an analyst at Oxford Economics, said the influx would increase government costs by at least 1.5% of GDP, equivalent to a hit of more than £10bn.
Poland’s public finances could also get a boost from a deal to unlock tens of billions of euros in grants and loans under the European Union’s Recovery Fund.
Money from the fund was blocked due to the need for judicial reforms in Poland to make its courts more independent.
European Commission Executive Vice-President Valdis Dombrovskis said last week that there were still “outstanding issues” but added that officials were getting closer to an agreement. However, he pointed to previous “false dawns” in talks between Brussels and Poland.