State interventionism in Poland during the COVID-19 crisis

Konrad Stańczyk,
Colonel, Professor MUT,
Military University of Technology,
Warsaw, Poland

As a result of the COVID-19 pandemic, which poses a serious threat to the public health and significantly affects citizens, societies and economies, the world is faced by a historic socio-economic challenge. This is due to the fact that the COVID-19 pandemic is associated with a significant human aspect. It brings significant social consequences, and at the same time causes a serious shock to the global and European economy.

The global economy is now experiencing the deepest recession since the Great Depression in the 1930s, with GDP declines of more than 20% and a surge in unemployment in many countries. Even in countries where containment measures have been relatively light, early data is already making clear that the economic and social costs of the pandemic will be large.

The spread of the virus is causing disruption of global supply chains, volatility in financial markets, consumer demand shocks and negative impact in key sectors like travel and tourism. The immediate effect of fighting the pandemic will be an unprecedented decline in international economic exchange. Due to a periodic closure of borders, shopping centres, hotels, restaurants and cultural facilities, private consumption will also decline. Some economic sectors, such as entertainment, restaurant, and above all, tourist and transport ones, need to prepare for a noticeable effects.

In order to reduce the negative effects of this crisis, some entities have taken advantage of the forms of support offered as part of state interventionism. The reference to the market economy allows for treating interventionism as the active role of the state in relation to the economy, which boils down to a systematic, orderly influence of the state on the overall condition of economic processes, while fully preserving the importance of market mechanisms, which continue to organize economic processes .

In Poland, the state of epidemic risk, and subsequently the state of epidemic in connection with the spread of an infectious disease caused by the SARS-CoV-2 virus, referred to as COVID-19, was announced in March 2020. In order to counteract the negative consequences of the pandemic for the economy, the government prepared a legislative package known as the “Anti-Crisis Shield”.

The main purpose of introducing these measures was to protect workplaces and ensure financial and health security of citizens and companies in Poland.  It is a set of several dozen important facilities which aim to help companies by providing financial support, subsidies for maintaining workplaces, exemptions from social security contributions or postponing numerous administrative obligations.

The anti-crisis shield 2020/21 is based on five pillars:

  1. Protection of jobs and employee safety – PLN 30 bn

    The government aims to contribute to employees’ salaries in order to protect jobs.

  1. Financing of entrepreneurs – PLN 74.2 bn

    It is the biggest package of the government aimed at saving companies. It includes a loan for micro companies of PLN 5000 to safe jobs, possibility of obtaining loans on preferential conditions, more beneficial conditions for settling losses from 2020, suspension of social contributions for the Social Insurance agency for 3 months, favourable tax regulation prolonging deadlines retail tax suspension, support for transportation companies and much more.

  1. Health care – PLN 7.5 bn

    Investments will be made in medical infrastructure, for example adjusting medical units to the needs of the elderly or building daily medical care centres.

  1. Strengthening the financial system – PLN 70.3 bn

    The Polish government has launched two packages: regulation package of the Ministry of Finance and the Financial Supervision Authority and Liquidity Package of the Polish National Bank (for example lowering capital buffers, REPO operations enabling increased liquidity in the banking sector; lowering the base interest rate from 1.5% to 1.0% and the required reserve rate from 3.5% to 0.5% increasing liquidity in the banking sector; potential LTRO operations and similar operations used by the European Central Bank).

  1. Public investments – PLN 30 bn

    Main focus areas are infrastructure, modernisation of schools and hospitals, energy transformation, digitalisation, biotechnology and pharmacy, environment protection policy.

Both small and large entrepreneurs, conducting sole proprietorship and persons employed on the basis of civil law contracts, may count on the state support.

The COVID-19 pandemic in 2020/21 is the first crisis of its kind, which concerns all countries and influences all fields of social, economic and cultural activities. For societies, nations, countries or even a single citizen, this phenomenon is something new, unknown and as a result dangerous and paralyzing. In these troubled times, it is the state that must intervene in the economy to overcome this crisis.


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