Stock-flow adjustment in the evaluation of public debt dynamics in Poland
Stock-flow adjustment in the evaluation of public debt dynamics in Poland

Summary/Abstract: Goal – The aim of the paper is to analyse the significance of the economic category referred to asstock-flow adjustment (SFA) for the evaluation of the level and dynamics of public debt in Poland. Thecategory is an important part of the analyses called excessive deficit procedure (EDP) conducted byThe European Commission. It is also a major contributor to the growth of public debt. It is also relatedto political activities which fall into the category of creative accounting. Stock-flow adjustment is,therefore, a threat to the stability of public debt. In spite of all this, SFA is not taken into account inPolish documents related to debt management.Research methodology – The analysis performed by the Author is based on the desk researchmethod. It is mostly a qualitative analysis, relying on the literature and both strategic and operationaldocuments of the European Commission and the Polish Ministry of Finance.Stock-flow adjustment is widely regarded in literature as an expression of the hidden part of publicdebt dynamics. This paper offers an evaluation of SFA’s influence on public debt and its differentdegrees across both developing and developed countries. Moreover, the documents of the EuropeanCommission and the Polish Ministry of Finances are analysed from the point of view of SFA.Score – The analysis undertaken in the paper reveals that stock-flow adjustment has a strongimpact on the occurrence of the so-called debt pikes, i.e. sharp increases in public debt. Many authors’conclusions confirm that SFA considerably affects the level of debt. They also associate it with the restrictivenessof fiscal rules and creative accounting. Thus, SFA is an important element of public debtsustainability. SFA is included in European Commission analyses, but fails to be recognized by Polishdocuments. It is strongly recommended that SFA is taken into consideration in public debt managementin Poland.

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