Poland is currently dealing with both economic and political difficulties as it increases its defense spending. The country plans to allocate 5% of its Gross Domestic Product (GDP) to the defense sector this year, which could lead to tensions with financial markets. Public deficit is expected to reach 7.1% next year, the same level as in 2026. Until recently, Poland's economy grew at a rate above 3%, allowing it to manage its finances effectively with a relatively low debt of around 60% of GDP. However, the budgetary situation is worsening, and by 2027, debt is projected to reach 70% of GDP, a crucial year for legislative elections. Across Europe, the cost of borrowing over 10 years has risen significantly, and Poland is particularly affected, with its 10-year borrowing rate surpassing 6.3%. Recently, the credit rating agency Moody's downgraded Poland's rating to A3, joining Fitch and S&P in this move. This is the first downgrade in a decade and serves as a warning to the government about its management of public spending. "Budget deficits have remained significant despite economic growth above the trend, a low unemployment rate, and substantial European Union funding inflows," Moody's noted. The agency criticized Poland for not using its strong economic performance to improve its public finances and for spending too much, especially on defense. Since the start of the war in Ukraine, Poland has been significantly increasing its military capabilities. A 44 billion euro military modernization plan, funded through a loan from the European Union, is underway. This year, Poland will spend nearly 5% of its GDP on defense, and that figure will decrease slightly to 4.5% in 2027. By 2030, it is expected that Poland will have more tanks than the United Kingdom, Germany, France, and Italy combined. The threat from Russia is a major concern, and Prime Minister Donald Tusk emphasizes the need for rapid military development, despite challenges such as inflation, a fuel crisis, and pressure on the bond market. Prime Minister Tusk's ability to make budgetary savings is limited, especially with tensions between him and President Karol Nawrocki, who is backed by the parliamentary opposition. President Nawrocki has used his veto power to block several government initiatives, including a special tax on the profits of oil and gas companies. Additionally, the legislative elections scheduled for November 2027 are not expected to be favorable for budgetary economics, adding to the complexity of the situation.