September 28, 2016 / 3:30 PM / 3 years ago

Polish PM replaces finance minister as pushes stimulus plan

WARSAW (Reuters) - Polish Prime Minister Beata Szydlo sacked her finance minister on Wednesday and gave the job to the influential economy minister, saying a reshuffle was needed to make a wide-reaching economic stimulus plan more effective.

Poland's Finance Minister Pawel Szalamacha arrives at a government meeting in Warsaw, Poland September 27, 2016. Picture taken on September 27, 2016. REUTERS/Kacper Pempel

Since winning an election last October, Szydlo’s Law and Justice (PiS) party has pledged to spend billions of euros of private and public money to boost growth and wealth in Poland, while also giving the state more say in the economy.

Szydlo said that giving Mateusz Morawiecki, the plan’s author, more responsibility as finance minister would make it easier to implement. He replaces Pawel Szalamacha.

However, economists said the move could raise further questions over the conservative government’s ability to keep its budget deficit - already pressured by increased welfare spending - within European Union limits.

“Time is of the essence,” Szydlo told a news conference. “This is the moment to introduce concrete solutions, so I have decided we need better coordination.”

Szydlo’s government has faced criticism from the EU and the United States over a conflict with the constitutional court and other moves seen as undermining the rule of law and concentrating too much power in the hands of the executive.

Piotr Bielski, an economist with BZ WBK bank, said giving Morawiecki responsibility for state budgets raised questions over the government’s policy priorities.

“There are questions now over the extent to which Morawiecki will defend (curbing) the deficit since he is also responsible for other economic indicators. Will he be made accountable for fast economic growth or for keeping spending in check?” he said.


Szydlo’s cabinet also approved on Wednesday its 2017 budget plan that envisages a deficit of 2.9 percent of gross domestic product (GDP).

The Polish economy has been one of the best performing in the 28-nation EU in recent years, and the only one to avoid recession in the aftermath of the global financial crisis.

But rating agencies have echoed the EU concerns over what they see as the government’s undermining of key institutions and its possible impact on economic policy. Standard and Poors downgraded Poland’s rating in January.

Szalamacha, 47, had spearheaded a progressive tax on turnover in the retail sector that has been suspended by the European Commission after less than a month over suspicions that it gives smaller companies an unfair advantage.

Additional reporting by Agnieszka Barteczko, Jakub Iglewski and Anna Wlodarczak-Semczuk; writing by Justyna Pawlak; Editing by Gareth Jones

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