Tusk Revamps Cabinet to Accelerate Growth of Polish EconomyDavid McQuaid and Dorota Bartyzel
Prime Minister Donald Tusk made good on a vow to bring fresh blood to Poland’s cabinet, replacing the country’s longest-serving finance minister with a 38-year-old bank economist to help spur a recovery.
“Poland has an opportunity for truly good economic growth,” Tusk told a press conference in Warsaw today, introducing new members of his government. “We need acceleration after a period of uncertainty and new energy to make the best use of European Union funds.”
Mateusz Szczurek, chief economist for central and eastern Europe at ING Bank in Warsaw, will replace Jacek Rostowski, who’s overseen finances since 2007. Maciej Grabowski, who served as deputy finance minister in charge of taxes, will take over the Environment Ministry from Marcin Korolec, who lost his position as he hosted this week’s United Nations climate talks in Warsaw.
Elzbieta Bienkowska, the minister of regional development, was named deputy prime minister and will expand her duties to oversee transport and infrastructure. Bienkowska said Poland needs a “leap” in development after the European Parliament yesterday alloted it 107 billion euros ($144 billion) in the 2014-2020 budget, keeping the country of 38 million as the EU’s top net recipient.
The European Union’s largest eastern economy expanded 1.9 percent in the third quarter from a year earlier, the fastest pace since April-June 2012, fueled by exports to the euro are and rising domestic spending. Gross domestic product is set to increase 2.7 percent next year, according to the median forecast of 46 analysts surveyed by Bloomberg, compared with 1.2 percent growth in 2013.
Tusk said he’ll present a detailed outline of the government’s new policy agenda on Nov. 23, at the national convention of his ruling Civic Platform party in Warsaw.
Civic Platform 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 Dariusz Rosati, the head of parliament’s budget committee.
The zloty has been resilient amid the political turmoil, losing 0.3 percent against the euro in the past month. It declined after the reshuffle announcement, slipping 0.1 percent to 4.187 per euro at 1:17 p.m. in Warsaw. The yield on the government’s benchmark 10-year bond rose to 4.46 percent, up eight basis points, or 0.08 percent, from yesterday.
“Szczurek knows markets very well and for sure will be a great communicator,” Piotr Bujak, chief economist at Nordea Bank in Warsaw, said by phone. “The risk is that he could have a brutal collision with politicians in 2015, which is both an election year and the first budget he must prepare.”
The ING economist, a cycling enthusiast and father of five, replaces the finance minister who’s enjoyed a tenure twice as long as any predecessor since 1989 and helped Poland become the only EU member to avoid a recession since 2008.
Tusk said today Szczurek’s views on the economy are “identical” with his own and those of Rostowski.
The backdrop is an economy poised to grow at its weakest pace since at least 1997, which led to a tax-revenue shortfall this year and forced Rostowski to amend the 2013 budget and widen the central government deficit by 12 billion zloty.
“My task is to enable a development leap,” Szczurek said today at the government news briefing. “On the one hand by not acting as a brake on growth, and on the other by ensuring that it’s sustainable and doesn’t end with a leap into the abyss.”
One of Poland’s top priorities will be to “radically speed up” work on developing shale-gas output, Tusk said today, explaining his surprise nomination of Grabowski to the Environment Ministry.
At the Finance Ministry, Grabowski oversaw the introduction of a tax on copper and silver output and also helped draft a hydrocarbon tax announced by Tusk in a 2011 policy speech. The proposed measures, which would set new rules for explorers and mandate state participation in ventures, come as drilling has slowed and investors including Exxon Mobil Corp. and Talisman Energy Inc. have left Poland.
Tusk had been expected to announce the shakeup 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 said the same day that 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 ruling party has also been beset by allegations of vote-buying at a regional convention last month and a probe of alleged bribe-taking in procurement contracts valued at more than $484 million, according to estimates by Warsaw prosecutors.
“What’s being talked about is the cabinet shakeup, which is insignificant, while the issue of corruption is ignored,” Jaroslaw Kaczynski, party leader of Law & Justice, told reporters today in Warsaw. “Appearances are that nothing’s happened, while something very, very serious has happened.”
Kaczynski said his party will demand explanations from Tusk and law enforcement officials in parliament.
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 paid services, Rosati said in an Nov. 18 interview.
“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.”