Finance and Economy Minister Andrzej Domański said the proposal championed by President Karol Nawrocki and central bank governor Adam Glapiński amounted to what he described as "financial fiction."
"There is no such thing as free financing,” Domański said in an interview with private broadcaster TVN24, arguing that even if the central bank sold its gold reserves and transferred the proceeds to a defence fund, it would face significant costs in the coming years.
Earlier on Wednesday, Glapiński said at a news conference that Poland held about 570 tonnes of gold at the end of February, worth roughly PLN 340 billion (EUR 80 billion).
He said unrealised profits from the rise in gold prices amounted to about PLN 197 billion and suggested the central bank could realise some of those gains through "active management" of its gold reserves to help finance the proposed plan.
Domański warned that relying on unrealised profits tied to the current price of gold to finance military modernisation would be risky because gold prices can fluctuate significantly.
He added that costs associated with operations involving gold reserves would reduce future profits of the central bank.
Domański also criticised proposals to create complex financial structures that he said would operate outside normal government budget controls.
He said the mechanism proposed by the central bank could generate costs—such as interest payments—potentially twice as high as those associated with the European Union's SAFE defence financing programme.
Domański also said that the proposal backed by Nawrocki and Glapiński would require Bank Gospodarstwa Krajowego, the state development bank, to cover any shortfall if profits from gold sales proved lower than expected, effectively turning the plan into "a form of borrowing rather than free funding."
According to Domański, the "SAFE 0%" proposal may serve primarily as a justification for a presidential veto of legislation aiming to implement the EU programme.
Poland expects to be the largest beneficiary of the EU’s SAFE programme, which would allow Warsaw to access about EUR 43.7 billion in low-interest loans for defence investment.
The government says about 89 percent of the funds would go to Polish defence companies, while the rest would support the military, police, border guards and cybersecurity initiatives.
(gs)
Source: IAR, PAP