13th Apr 2021

Poland faces pre-election anti-euro backlash

Economists have poured scorn on Polish politicians' drive to delay the country's eurozone entry, but in the run-up to general elections most of Poland's parliament wants to slow the process down.

Looking at the Polish lower house, the Sejm, as a whole, Polish daily Rzeczpospolita reported on Wednesday (29 June) that political parties representing 285 out of the total 460 seats are against the 2009 target.

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Some groups, such as the eurosceptic Self-defence party, want to take the euro off the agenda for the long term.

"In practical terms these doubts will disappear very quickly", HSBC investment bank's eastern Europe analyst David Lubin told EUobserver.

A Credit Suisse economist said "People are just trying to gain political weight out of this. It's a tactical thing".

The September elections are widely expected to produce a coalition government composed of the centre-right Civic Platform party (PO) and the rightist Law and Justice group (PiS).

But while the PO is keen to get into ERM II - the waiting room for the euro - in April 2006 leading to potential euro entry by 2009, PiS believes Poland should move ahead more slowly.

New era of fiscal discipline

HSBC's Mr Lubin dismissed the PiS stance as pre-election posturing though, saying the party lacks a credible fiscal policy and that the PO would never join a coalition that sought to delay euro membership.

He pointed out that the political elite in Poland and Hungary are treating euro entry as a historic milestone on a par with enlargement, adding "We are going to see a new chapter of fiscal discipline in the east".

Credit Suisse contacts said that some politicians in eastern Europe are jumping on nationalist bandwagons, but that most economists see euro entry as a boost to trade and foreign investment in the region.

The Polish National Bank calculates that the single currency would yield an extra 0.3-0.5 percent a year in terms of GDP growth.

A source at the bank said the recent anti-euro debates in Italy and Germany and the French and Dutch no votes "have not helped" the single currency's reputation in Poland.

But he explained that national pride is at the root of anti-euro currents in eastern Europe today.

"In the communist period our currency was non-exchangeable. Now, over 15 years later, it's strong, stable. It's quite an achievement and people don't want to let go of this", he said.

PiS acting for good of Poland

PiS treasury committee chief, Kazimierz Marcinkiewicz, hit back at the economists' comments saying "It's possible that these bank experts don't know much about politics...We are not fighting this election just to adopt PO policies".

He added that April 2006 entry into ERM II will be impossible because there is too little time to form a consensus on the subject.

The minister indicated that PiS has held meetings on the euro with most of the investment banks in Poland and that its own economists are working on a set of "objective criteria" to evaluate currency conversion.

"Our position is not based on ideology, but on the good of the country. When it's good for Poland, we will support the euro", Mr Marcinkiewicz stated.

The Polish National Bank cut interest rates on Wednesday in order to stimulate growth in contrast to the European Central Bank (ECB) which has kept rates stable in the euro zoone for over two years.

Meanwhile, the Polish mint has applied to the ECB for a licence to start producing euro banknotes as early as 2007, Gazeta Wyborcza has reported.

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