Tim Gosling in Prague -

Poland's Monetary Policy Council (MPC) held back from garroting central bank Governor Marek Belka on June 17, following a meeting to investigate the tape scandal that has put him on the ropes. However, he could yet find himself sacrificed by the government.

A tape recording from 2013, and released on June 13, featured Belka "negotiating" with Interior Minister Bartlomiej Sienkiewicz over the fate of the finance minister, as well as blasting members of the traditionally argumentative rate setting council. That saw the MPC demand the meeting, with many suggesting the respected Belka is likely on his way out.

The MPC ended the session with a statement calling its "cooperation to date" with Belka "very good." However it also noted that it "regrets that the utterances made by the NBP President and recorded by way of unlawful eavesdropping may create the impression that the Chairman of the Monetary Policy Council played a part in the political-electoral cycle. Such involvement would be unacceptable."

However, as Commerzbank analysts note, a key note of support was proffered. "The MPC concluded that rate decisions under Belka's tenure had not been 'compromised'," they point out, suggesting "the crisis appears to have blown over already."

The temperate nature of the statement suggests to others that the governor has dodged the axe. "Hardly a ringing endorsement, but maybe not the killer blow to get rid of him," writes Tim Ash of Standard Bank. "If Belka is not willing to resign, and the government/presidency is not going to remove him, he may just cling on."

According to Bloomberg, two of the 10-member panel did not attend the meeting, including the main target of Belka's comments on the tape, Jerzy Hausner. 

For Belka, there remains the problem that he could yet be sacrificed by Prime Minister Donald Tusk, whose centre-right Civic Platform (PO) government has been struggling against the populist Law and Justice (PiS) opposition. As the country enters a busy election cycle over the next year, PiS is pushing to take full advantage of the furore centered on the National Bank of Poland (NBP), calling for the head of both Interior Minister Sienkiewicz and the cabinet.

Tusk has sought to defend his interior minister and deflect accusations that his chat with Belka was actually illegal. The PM also refused to be drawn on Belka's position, which is officially appointed by the president. Tusk said that it was not up to him to decide on the fate of the head of the central bank, adding somewhat risibly that the two officials had been "discussing how to help, rather than harm, the Polish state."

However, the polls will likely determine if Belka stays or not. "Ultimately the question is has the public's faith and trust in the institution of the NBP been damaged by this somewhat unsavioury saga, and does Tusk think that hanging on to Belka damages his own position as elections approach. Maybe if there are no repercusions from events over the past few days (no one resigns/is fired), the danger is left of an administration which is unaccountable to the population at large," sums up Ash.

More pertinent still may be that the weekly magazine that released the tape says it has other recordings (not that Wprost will discuss the source of any of the material), as bne reported. If the pressure continues to rise on the PM, it's tricky to see Belka retaining his post, no matter the level of respect the markets have for his stewardship.

Commerzbank says it's unperturbed. "The NBP is a solid EU-style institution, larger than the personalities involved at this time," they write. "[E]ven if further inter-personal developments were to arise and cause hiccups, we would buy any dip triggered by such an event."