* Tusk's Civic Platform wins new four-year term
* Tusk to seek new coalition with Peasants' Party
* Markets, analysts welcome outcome as sign of stability
By Gareth Jones
WARSAW, Oct 10 Centre-right leader Donald Tusk
has become the first Polish prime minister since the fall of
communism in 1989 to win a second consecutive term following his
Civic Platform's election victory, nearly complete results
showed on Monday.
Investors hailed the outcome as a guarantee of political and
economic stability in the European Union's largest eastern
member in turbulent times, but Fitch ratings agency urged Warsaw
to move swiftly to put its public finances in order.
With 99 percent of the votes from Sunday's election counted,
Tusk's pro-business party had 39 percent and its main rival,
Jaroslaw Kaczynski's nationalist-conservative Law and Justice
party, 30 percent. Turnout was 49 percent.
A new party called Palikot's Support Movement also struck a
chord with voters by winning 10 percent over by criticising the
powerful Roman Catholic Church and championing causes such as
gay rights and legalisation of soft drugs.
Political analysts said Sunday's election result showed
democracy had come of age in the country of 38 million people.
"The ruling party and coalition for the first time in
Poland's post-communist history has been re-elected and that
shows the consolidation of democracy in Poland," said Jacek
Raciborski, a political scientist at Warsaw University.
President Bronislaw Komorowski, who is expected to invite
Tusk to form a government after the publication of final results
on Tuesday, said the election results pointed to a swift
creation of a new coalition.
Civic Platform (PO) is projected to secure around 206 seats
in the 460-member lower chamber, or Sejm.
Its ally, the rural-based Peasants' Party, is on track to
win about 30 seats, giving Tusk enough support to rebuild the
same coalition that has steered Poland smoothly through the
economic turmoil of the past four years.
Tusk is also expected to try to lure moderate members of the
post-communist Democratic Left Alliance (SLD) into a new
coalition. The SLD won only about 8 percent of the vote after
losing many younger voters to a new libertarian grouping and its
leader Grzegorz Napieralski said he would step down.
FOCUS ON REFORMS
"The outcome of the elections is good news for investors as
pro-market policies are likely to be continued and there should
be a solid parliamentarian majority for fiscal reforms," Danske
Bank said in a note.
The Polish zloty was 1.1 percent higher against
the euro at midday on Monday, bonds also firmed and the Warsaw
bourse's main index rose 1.6 percent, outperforming
"We expect a new coalition government to be formed
relatively fast and would expect the new coalition government to
propose concrete fiscal reforms soon," Danske Bank said.
Tusk's party also won a clear victory in the upper chamber,
or Senate, where it was projected to win 62 of the 100 seats.
The success of Palikot's Support Movement, led by former PO
lawmaker Janusz Palikot, signalled disaffection among younger
voters and a challenge to the authority of the Catholic Church,
which has long been venerated as a pillar of national identity.
The outgoing coalition has presided over four years of
strong economic growth, steering Poland smoothly through the
2008-09 global financial crisis without dipping into recession.
Its victory ends a string of defeats for ruling parties in
elections in EU member states this year, including in Portugal,
Latvia, Denmark and Ireland.
ATTACKING DEBT AND BUDGET DEFICIT
Civic Platform has pledged more cautious reforms aimed at
reining in the public debt and budget deficit, expected to reach
53.8 percent and 5.6 percent respectively this year.
It also wants to continue a privatisation programme set to
net 15 billion zlotys ($4 billion) for state coffers in 2011 and
to pursue closer ties with Poland's EU partners.
Fitch ratings agency said the new government would struggle
to cut the fiscal deficit to below 3 percent of gross domestic
product in 2012 as forecast in its draft budget, given a likely
scenario of slowing economic growth.
"If it is serious about its... target, the incoming
government will have to implement more drastic fiscal measures.
This will likely require further cuts in expenditure," it said.
An adviser to Tusk, Jan Krzysztof Bielecki, said economic
growth may slip to 3 percent next year from the 4 percent
envisaged in the draft budget.
The election result is a personal triumph for Tusk, 54, a
pragmatic liberal conservative from near Gdansk on Poland's
Baltic coast, who was involved in the Solidarity movement that
helped end decades of communist rule.
Tusk, whose country holds the EU presidency until the end of
this year, favours closer integration with the rest of the bloc
and says joining the euro remains a strategic goal for Poland
despite the debt crisis in the euro zone.
He has good personal ties with German Chancellor Angela
Merkel and has maintained a cautious rapprochement with Russia,
despite strains over a plane crash there last year that killed
then-President Lech Kaczynski, Jaroslaw Kaczynski's twin.
Jaroslaw Kaczynski's calls for a halt to privatisation, for
higher taxes on the wealthy and for a more combative stance in
dealings with the EU and Russia had unsettled investors.