"Market-friendly" minister handed the keys to Polish economy

By bne IntelliNews September 28, 2016

Deputy Prime Minister and head of the economy ministry Mateusz Morawiecki was handed the finance portfolio on September 28 in a government reshuffle. While the former banker has leapt up the power rankings with the announcement, Prime Minister Beata Szydlo was also careful to note the challenges the government is putting before him.

The move sees Morawiecki thrust into a position in which he will oversee both the economy and the government's fiscal management. The former head of Poland's third largest bank BZWBK had already become a key player as the head of the development ministry responsible for the implementation of the cabinet’s flagship Programme for Responsible Development

Morawiecki replaces Finance Minister Pawel Szalamacha, who has reportedly fallen out of favour with the PM and - perhaps more importantly - the chairman of the ruling Law and Justice (PiS) party, Jaroslaw Kaczynski. Szalamacha made headlines earlier this year for criticising the government’s programme of child benefits, which PiS considers a cornerstone policy. Morawiecki is seen as Kaczynski’s man in the cabinet.

The economy and finance minister will now have to reconcile next year’s budget expenditure - including the PLN23bn (€5.3bn) child benefit programme - with revenue in order to avoid pushing the deficit above the EU's 3% threshold. Crossing the line could see Poland put back under the Excessive Deficit Procedure. 

Morawiecki will also oversee the financial aspects of other reforms promised by PiS, such as lowering the retirement age or increasing tax-free income. Steering clear of excess deficit will hinge upon economic growth and effective collection of taxes. However, Fitch warned in late August that growth may come below government expectations.

Szydlo said Szalamacha will take on a new important position, but declined to offer details. Polish media speculate Szalamacha might become the head of financial market watchdog KNF.

 

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