Zloty Strengthens as Premier Tusk to Unveil New Government Plan

The zloty appreciated for the first time this week against the euro ahead of Prime Minister Donald Tusk’s parliamentary speech about the new government’s four-year plan to bolster public finances.

Tusk, the first Polish premier to win re-election since communism ended, will address lawmakers from noon in Warsaw. He must win a confidence vote tomorrow to be confirmed as premier.

“The zloty may gain if the prime minister announces reforms as the markets are expecting,” Maja Goettig, chief economist at Bank BPH SA in Warsaw wrote in a note today.

The zloty appreciated 0.3 percent to 4.4363 per euro at 9:32 a.m. in Warsaw. The currency has weakened 1.2 percent this week amid concern the euro-area’s debt crisis will escalate.

While Poland is the only European Union economy to avoid recession since Tusk won power in 2007, public debt has soared to almost 54 percent of gross domestic product and the budget deficit has quadrupled. This, along with the prospect of slower growth, has boosted the cost of insuring Polish debt against default and prompted rating companies to call for long-term fiscal cuts to shield its A- credit grade.

Tusk will stick to a plan to eliminate the general government budget deficit in 2015 and run a balanced budget for the following three years, Finance Minister Jacek Rostowski said before the election. That would trim the country’s debt to about 40 percent of gross domestic product in 2018.

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