Tusk Poised to Start Rescue Mission With Polish Cabinet Revamp

Polish Prime Minister Donald Tusk is set to trigger a cabinet shakeup that may claim the country’s longest-serving finance minister in an attempt to boost the popularity of the second-term government.

Tusk on Nov. 18 said the revamp will have a “deeper dimension.” Personnel and “structural” changes to the cabinet will be announced today at a midday press conference in Warsaw, the prime minister told reporters yesterday. Jacek Rostowski, who’s overseen finances since 2007, will probably be included according to Dariusz Rosati, a senior member of the ruling party and European Union Budget Commissioner Janusz Lewandowski.

Tusk’s Civic Platform party lost its poll lead in May for the first time since 2007 and trailed the opposition Law & Justice party by 9 percentage points this month. Voters were angered by government plans to take over pension-fund assets and by corruption scandals, putting government on its heels, according to Rosati, the head of parliament’s budget committee.

“As a ruling party, we’ve been put on the defensive,” Rosati said in a Nov. 18 interview. “The Finance Ministry is the most demanding post and a cabinet reshuffle without a change there doesn’t make sense.”

The zloty has been resilient amid the political turmoil, having weakened 0.3 percent against the euro in the past month. The yield on the government’s benchmark 10-year bond was 4.38 percent yesterday, compared with 4.23 percent on Oct. 18.

‘No Problem’

“The markets have already gotten used to the idea of a changing of the guard,” Jakub Borowski, a Warsaw-based economist at Credit Agricole (ACA) and member of Tusk’s Economic Advisory Council. “With the parameters for next year’s budget and pension reform already set, timing won’t be a problem.’

As many as seven of Tusk’s 19 ministers may be replaced today, including Rostowski and Environment Minister Marcin Korolec, according to a Nov. 18 report by Wprost magazine, which didn’t give the source of its information.

Rosati, named the ‘‘very probable” successor to Rostowski by website 300polityka.pl yesterday, said he didn’t “have such plans.” Lewandowski yesterday said by phone he still has his “mission in Brussels.” Boguslaw Grabowski, a former central banker who heads the supervisory board at the Warsaw-based Skarbiec investment fund, is another “most probable” candidate for the post, the Puls Biznesu newspaper said yesterday.

Growth, Deficit

Rostowski, 62, has been finance minister for six years, twice as long as any predecessor since 1989, and helped Poland become the only EU member to avoid a recession since 2008. He declined to address speculation that the ruling party’s falling popularity has put his job in jeopardy, a claim that Tusk denied last month.

Tusk promoted Rostowski to deputy premier in February to stress the government’s focus on fiscal discipline and economic growth. The backdrop is an economy poised to grow at its weakest pace since at least 1997, which led to a tax-revenue shortfall and forced Rostowski to announce a deficit overshoot for 2013, triggering talk in August that his job may be at risk.

Tusk had been expected to announce the changes after Nov. 23, when the ruling party elects new leadership. The timing was moved up after Transport Minister Slawomir Nowak resigned Nov. 15 after he failed to report a gift watch. Science Minister Barbara Kudrycka the same day said she’d leave the cabinet.

The scandal erupted as Civic Platform continued to founder in the polls. Support for Law & Justice rose to 31 percent from 30 percent last month, while the ruling party’s backing fell to 22 percent from 25 percent, the PAP news service reported, citing a Nov. 8-15 survey of 965 Poles by the polling company TNS Polska. No margin of error was given.

The government’s plan until the next election in 2015 should include a “radical simplification” of the tax code and a health-care overhaul to include more paid services, Rosati said.

“If a new finance minister changes anything, it should be for the better,” Lutz Roehmeyer, a fund manager at Landesbank Berlin Investment who helps oversee the equivalent of $13.5 billion, said by e-mail yesterday. “They have no incentive to do funny things because then they won’t be re-elected for sure.”

To contact the reporters on this story: David McQuaid in Warsaw at dmcquaid1@bloomberg.net; Dorota Bartyzel in Warsaw at dbartyzel@bloomberg.net

To contact the editors responsible for this story: Balazs Penz at bpenz@bloomberg.net; Hellmuth Tromm at htromm@bloomberg.net

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