WARSAW (Reuters) - Poland will use a mode of financing employed to fight the economic consequences of COVID-19 to help fund a large increase in military spending, the defence minister said on Tuesday, as the government seeks to modernise and expand the armed forces.
Poland's government has used bonds issued by institutions such as the national development bank BGK or state fund PFR - but secured by the state - to finance much of its spending on helping the economy through the pandemic.
This has helped it avoid including such spending in the state budget, a tactic that has been criticised by the Supreme Audit Office as lacking transparency.
Defence Minister Mariusz Blaszczak said the government would create an Armed Forces Support Fund, financed by government-secured bonds issued by BGK, treasury bonds, the state budget and profits from the central bank.
"This is a solution that was used by the COVID fund. I want to strongly underline that the Armed Forces Support Fund will be run by BGK, so it won't be some additional institution," Blaszczak told a news conference.
He did not say exactly how much the expansion and modernisation of the armed forces would cost. However, the leader of Poland's ruling Law and Justice (PiS) party, Jaroslaw Kaczynski, said spending would be "significantly higher" than 2% of gross domestic product, the level required of NATO states which Poland already exceeds.
"It is better to be safe and a little bit more in debt," Kaczynski said.
Blaszczak said the Defence Ministry aimed to have more than 250,000 full-time soldiers and more than 50,000 members of the Territorial Defence Force, which is made up of professional and part-time volunteer soldiers. In 2020, there were around 110,000 full-time soldiers.
(Reporting by Alan Charlish, additional reporting by Anna Wlodarczak-Semczuk, editing by Giles Elgood)