Wojciech Kość in Warsaw -
Two days before Poles head to polling stations on Sunday May 24, it is not at all clear who will become the country’s next head of state, in a run-off that is seen as a pointer towards this autumn's general election.
With polls showing the race is the tightest in years, it is hardly surprising that both candidates have resorted to plenty of promises that – in case the government implements them – will make any finance minister’s job pretty hard.
Following a surprise defeat at the hands of opposition candidate Andrzej Duda (Law and Justice party, PiS) in the first round on May 10, the incumbent Bronislaw Komorowski (the ruling Civic Platform, PO) has reinvigorated his hitherto complacent campaign. This, improvement, however, has not been showing up consistently in the polls.
In nine polls carried out by all major pollsters in Poland between May 14 and May 21, Komorowski edges ahead of Duda only in three, with 3pp the largest margin. Duda has the lead in the other six surveys, with 8pp the largest difference.
Out of the two, it is Komorowski who appears to have been trending up in recent days, however. Taking advantage of five years of experience in the presidential office, he looked more convincing and statesmanlike during both televised debates, on May 17 and 21, that were tipped to be decisive in pushing yet undecided voters to make up their minds. According to a poll carried out immediately after the debate on the evening of May 21, 42% indicated Komorowski as winner, with only 31% pointing to Duda.
Komorowski’s campaign promises have appeared to be better footed in what the president can actually do in Poland, which is not much. The president’s greatest power is arguably to draft law that can be sent to the parliament.
Using that prerogative, for example, Komorowski has drafted a law that will allow employees to retire after 40 years of work even if they are not 67 years of age, which is the current retirement age in Poland.
On other economic issues, the incumbent has been rather cautious not to give the current government too many headaches. During the TV debate on May 21, he was not too eager to answer a question on whether the state should help borrowers with Swiss franc-denominated mortgages. Neither has he engaged in trying to trump his opponent’s proposals to increase personal tax allowances or establish new benefits for children.
Duda has proposed to increase tax-free income from the current PLN3,091 to PLN8,000 a year, and to award a benefit of PLN500 per each child. He also proposed that CHF-denominated mortgages be converted to PLN on historical, i.e. low, rates.
All of Duda’s promises are estimated by the finance ministry to cost around PLN400bn, if they ever get to be carried out, which, again, seems extremely unlikely under the current Civic Platform government.
“The room for extra spending, be it pre-election or any other type, is actually quite limited,” Finance Minister Mateusz Szczurek told Bloomberg on May 19.
Szczurek has only recently led Poland’s effort to successfully reduce the country’s fiscal deficit to just 3.2% in 2014, with the outlook for suppressing it further to 2.7% in 2015. This prompted the European Commission to recommend taking Poland off the Excessive Deficit Procedure.
Duda’s promises, while understandable in a country where child benefits hardly exceed €25 a month in their most generous version, are made without any explanation on how they could be financed. PiS‘ only said that “the money is there”.
On the macro level, this has had some repercussions recently. The zloty is the third-worst performer against the euro among 24 emerging-market currencies since Duda won the first round on May 10, according to data compiled by Bloomberg. Two-year bond notes that Poland sold on May 21 were at a yield of 1.79%, not far off this month’s peak of 1.81%.
If there is anything that could alienate voters from Komorowski, it is his hasty decision to call a referendum on changing Poland’s electoral system. In an attempt to lure voters of Pawel Kukiz, a former rock musician who surprisingly came in third in the first round on May 10, Komorowski now said he wanted Poles to have a say on Kukiz’s pet idea to count votes much like in Britain’s first-past-the-post system.
The move has drawn criticism from the liberal media, which represents the bulk of the president's support in the major cities. If it is implemented, however, it will actually be very advantageous to PO. According to simulations, it would give PO over 300 seats in the 460-seat lower house of the Polish parliament, compared to 207 today.
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