September 7, 2013 / 7:12 AM / 6 years ago

Polish central banker says pension changes can boost economy

WARSAW (Reuters) - A Polish central bank policymaker has defended the government’s decision to transfer more than half of private pension fund assets to the state, saying the move would give the economy a vital investment boost.

New members of the Polish Monetary Policy Council meet at the National Bank of Poland headquarters in Warsaw February 23, 2010. Jan Winiecki (L-R), Andrzej Bratkowski, Anna Zielinska-Glebocka, Zyta Gilowska, Adam Glapinski, Slawomir Skrzypek, Elzbieta Chojna-Duch, Andrzej Kazmierczak, Andrzej Rzonca, Jerzy Hausner. REUTERS/Kacper Pempel

Anna Zielinska-Glebocka told Reuters Poland would not be able to reach potential growth levels of 3.0-4.0 percent, up from 0.8 percent, unless domestic demand reinforced the current main driver, exports.

“Changes to the pension system are positive and create a chance for an impulse, for a growth engine, in the form of investments that are so important. This will be helping the economy in 2014, although mostly in 2015,” Zielinska-Glebocka said in comments made on Thursday and authorized for release on Saturday.

“Investments and consumption demand are key for the Polish economy. A healthy economy must be based on domestic demand, not just exports. From this perspective changes to pensions are a good move,” she said.

Poland, the largest of central Europe’s emerging economies, said on Wednesday it would transfer many of the assets held by private pension funds, including treasury bonds, to a state vehicle. This means the government can book those assets on the state balance sheet to offset public debt, giving it more scope to borrow and spend.

Stock .WIG20 and bond prices fell as investors - including the pension funds - registered alarm that the government was reversing its business-friendly stance.

“The current situation on the currency market is temporary. It will be a short-lived reaction, ‘just in case’. I think that 4.30 is not a level that will stay for longer, the zloty will soon gain slightly,” Zielinska-Glebocka said.

“At this moment markets remain vulnerable, but mostly because of global factors, such as the Fed’s scaling down of its quantitative easing.”

The zloty was trading at 4.278 per euro late on Friday.

Rating agencies Moody’s and Standard & Poor’s both said the overhaul would be neutral for Poland’s creditworthiness. An S&P analyst called it “essentially an accounting exercise that swaps an explicit liability for a contingent one”.

But JP Morgan estimated more than $3.5 billion of foreign capital could flow out of the Polish debt market if the pension overhaul causes Polish assets to lose weight in global indices.


Poland barely dodged recession at the turn of the year, pressured by falling consumer confidence and a budget policy crimped by high public debt levels and lower tax revenues.

But a strengthening euro zone economy and the central bank’s moves which almost halved the main interest rate to 2.5 percent between November and July are now encouraging growth.

The latest data shows the Polish economy grew by 0.8 percent year-on-year in the second quarter, up from 0.5 percent in the first.

“Our projection is updated every month. Right now it shows that things are better than previously thought. Growth in the first quarter of 2014 could reach 2.9 percent,” Zielinska-Glebocka said.

“We will be thinking about what to do next year, we will see what’s happening ahead. We will depend on the bank’s new projection in November.”

She reaffirmed the central bank’s announcement that its neutral policy bias and interest rates would be kept unchanged till at least the end of the year.

Reporting by Karolina Slowikowska; Editing by Ruth Pitchford

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