Poland announces €47bn programme to support economy in wake of coronavirus outbreak

Poland announces €47bn programme to support economy in wake of coronavirus outbreak
By Wojciech Kosc in Warsaw March 18, 2020

Poland will spend a total of PLN212bn (€47bn) to help the economy that is being crippled by the outbreak of the coronavirus (COVID19) pandemic, President Andrzej Duda and Prime Minister Mateusz Morawiecki said on March 18.

The government is reacting to the expected overwhelming impact that the outbreak is nearly certain to have on Poland’s economy in the months to come. Most analysts predict the country’s GDP growth to ease to no more than 2% in 2020 from 4% last year.

An outlier forecast came from Morgan Stanley yesterday. The US bank said Poland’s GDP would shrink 3.6% in an optimistic scenario while sinking 5.6% were the events to take an unprecedentedly wrong turn.

The package, equal to 9.2% of Poland’s GDP, consists of five elements. The government pledged to cover up to 40% of employees’ wages in companies affected by the crisis in order to avoid layoffs. Employers would cover 40% as well. That means keeping jobs would come at a cost of a 20% wage cut for employees.

Companies that suffered a 25% reduction in turnover in 30 days because of the outbreak would qualify for the support.

The government also promised payouts of 80% of minimum wages to the self-employed although without offering details of their availability.

Entrepreneurs will also be entitled to support such as suspension of social security payments, preferential loans, credit guarantees by the state BGK bank, or the government taking over lease payments of transport companies – one of the most heavily hit by the crisis - via one of its agencies.

Duda and Morawiecki also pledged an extra PLN7.5bn for health care. Long underfunded and understaffed, Polish hospitals and their personnel have been strained to the limits by the coronavirus outbreak. With only around 1,000 people suspected of carrying the coronavirus, many hospitals are already reporting shortages of basics like masks or respirators.

Up to PLN30bn have been pledged for public investments. “We want to apply a classic investment impulse by the state and we are building a fund of up to PLN30bn for local roads, digitalisation, protection of environment, and modernisation of schools and hospitals,” Morawiecki said.

Another pillar of the package is to “ensure security of the financial system, including deposits, deposits, payments, deposits and withdrawals,” the PM’s office said in a statement.

Poland’s central bank, the NBP, cut interest rates by 50bp to 1% on March 17. The zloty has been trailing heavily against the euro, the US dollar, and the Swiss franc in recent days.

The Warsaw Stock Exchange’s main index, WIG, fell 24% since March 8 in line with the worldwide pummeling of the markets by the outbreak. The blue chip index WIG20 fell 23.8% in the same period.

Poland confirmed 251 cases of coronavirus on Wednesday afternoon, including five deaths.