Polish Government May Struggle to Cut Deficit Even With Own President
Financial markets have priced in the Polish presidential election victory of the ruling partyâ€™s in Sundayâ€™s runoff, considering him a market-friendly candidate who will allow the government to introduce austerity measures. Such measures are desperately needed to cut the countryâ€™s high budget deficit. So it may be a little worrying that Mr. Komorowskiâ€™s recent comments show he seems keen on keeping some key spending items.
Thereâ€™s growing consensus among economists that what Poland needs now are austerity measures. The latest call came Wednesday from the new head of the central bank, Marek Belka, who said political action will be required to cut the deficit. Rating agencies Moodyâ€™s and Fitch earlier remarked Polandâ€™s sovereign rating could come under pressure if the government doesnâ€™t push through an ambitious overhaul package.
Polandâ€™s Finance Minister Jan Vincent-Rostowski, as well as a number of respected public figures backing the center-right government, have said that Mr. Komorowskiâ€™s election victory gives hope the cabinet will implement spending cuts, while a victory of his rival Jaroslaw Kaczynski would destabilize the economy. This view roots in Mr. Kaczynski reputation of being a third-way socialist who would veto â€œeverythingâ€ this government will propose.