Belka's Bid to Be Polish Central Bank Governor May Fall Victim to Politics
Marek Belka’s chances of being confirmed as Poland’s next central bank governor may fall victim to politics as the country’s four main parties jockey for advantage in presidential elections later this month.
Any setback for Belka would disappoint investors because he has “most of the attributes of a top central banker,” said Maciej Reluga, chief economist at Warsaw’s Bank Zachodni WBK. The 58-year-old economics professor has been prime minister and finance minister, and held senior posts at the International Monetary Fund, United Nations and the U.S. Office of Reconstruction in Iraq.
Acting President Bronislaw Komorowski nominated Belka last month after Governor Slawomir Skrzypek and President Lech Kaczynski were killed in an April 10 plane crash. Opposition parties may try to block a vote on Belka as early as today, arguing the next governor should be named by the president after the June 20 or July 4 election. The bank may be without a governor until September unless Belka is confirmed this week.
“Delay of the appointment until autumn, even if it doesn’t trigger an immediate negative reaction, may result in greater market volatility, especially if one takes into account possible gains if Belka were to be confirmed,” said Mateusz Szczurek, chief economist at ING Bank Slaski ING in Warsaw.
The zloty has shed more than 6 percent against the euro since the plane crash, making it the worst performer among 25 emerging markets tracked by Bloomberg over the past two months. The zloty traded at 4.116 per euro at 9:58 a.m. in Warsaw, up from 4.139 yesterday.
Komorowski’s Civic Platform is still 25 votes short of the majority needed in the 460-seat lower house to confirm Belka. Support will be needed from either the Peasants Party’s 31 lawmakers or the 43 members of the Democratic Left Alliance.
“Of course it would be better if the confirmation vote doesn’t happen at this session, but our parliament club won’t be making its final decision until a 9 a.m. meeting tomorrow,” Franciszek Stefaniuk, deputy chairman of the Peasants Party, said yesterday by phone.
The dilemma may be greatest for the Left Democrats, in whose governments Belka served. Civic Platform’s efforts to build its base by appealing to pro-market elements of the Left, partly by recruiting leaders such as Belka and former Economy Minister Jerzy Hausner, who won a seat on the central bank’s Monetary Policy Council in February with the ruling party’s support.
The legislature’s public finance committee will question Belka at a special hearing at 1 p.m. The Democratic Left Alliance won’t decide until tomorrow whether to support a confirmation vote on Belka, party spokesman Tomasz Kalita said in parliament today.
“Provided the opinion will be positive, Komorowski will include the vote on the nomination in tomorrow’s agenda,” parliamentary spokesman Krzysztof Luft told reporters today.
Delaying the vote would leave the central bank without a permanent governor until early September “at a time when European public finances are in crisis,” Finance Minister Jacek Rostowski said on May 27.
Parliament will adjourn in mid-July for a six-week summer recess, and the new president may not be sworn in until early August, he said. Komorowski, the candidate of the ruling Civic Platform party, leads opposition leader Jaroslaw Kaczynski of the Law & Justice party in recent opinion polls.
Law & Justice wants to block Belka’s nomination because it is “a political ploy” to ensure the ruling party’s pick gets approved before the presidential election, said Mariusz Blaszczak, a spokesman for Law & Justice.
“Nothing happening in the economy or public finances justifies such haste,” Blaszczak said yesterday by phone.
“Surveys show that the SLD’s voter base strongly supports Belka,” said Radoslaw Markowski, a sociology professor at the Polish Academy of Sciences. “There may be a calculation by Civic Platform to make sure these voters flock to Komorowski if the presidential elections go to a two-candidate runoff.”
Belka met with SLD leader Grzegorz Napieralski yesterday. Party leaders wouldn’t comment on the meeting or on whether they would join forces with Law & Justice and the Peasants Party to delay the vote, whose timing they also question.
‘Anything Can Happen’
“Anything can happen and nothing has been settled,” Marek Wikinski, the deputy chairman of the SLD’s parliamentary club, said by phone yesterday.
Failure to confirm Belka means prolonging a dispute between the government and the central bank’s management board, which resisted extending a $20.5 billion flexible credit line from the International Monetary Fund even after a majority of the bank’s Monetary Policy Council backed the proposal.
“So far tensions within the central bank and between the bank and the government haven’t had any negative impact on the zloty and the debt,” Szczurek said. “However, allowing the impasse to drag on is a risk factor.”
The IMF’s April report on Poland, approved by Belka in his role as director of the funds’ European Department, urged the central bank not to rush on tightening rates and even to consider rate cuts in case of zloty appreciation. It also said central bank could be more active on the foreign-exchange markets under some circumstances.
“Regarding monetary policy, we assume that Belka will present a pragmatic approach and would be positioned somewhere in the middle of the council’s restrictiveness ranking though perhaps with a slight shift toward dovish side,” Reluga said.