Risks and Trends

Belka, Szczerski, Raczkowski at Polityka Insight's conference

Risks and Trends 2016 Report 2016-02-16
More than 270 business representatives, political figures, and diplomats attended the “Risks and trends 2016” conference. Deputy prime minister for economy and National Bank of Poland governor were amongst those answering guests’ questions.

What happened at the conference

Government representatives and experts. Deputy Prime Minister and Minister of Development Mateusz Morawiecki delivered the opening speech. Later during the conference keynote speakers NBP governor Marek Belka, presidential minister for international affairs Krzysztof Szczerski, and Deputy MinFin Konrad Raczkowski addressed guests and answered their questions. During three panels domestic and foreign experts discussed global, European, and Polish risks and trends in 2016 (details in separate analyses). The conference took place in Warszawa’s Intercontinental hotel. Its partners included Citibank Handlowy, Boston Consulting Group, Play, and Jeronimo Martins.

Several hundred guests, top companies. Representatives of business, legal firms, public administration, the International Monetary Fund, the World Bank, and key embassies attended the conference. Guests included PKO BP Chief Executive Zbigniew Jagiełło, mBank Deputy CEO Przemysław Gdański, deputy head of Polpharma Bożena Kozakiewicz, and Orange Polska board member Piotr Muszyński. The conference’s partners were represented by Jorgen Bang-Jensen, director general at Play, managing partner at Boston Consulting Group’s Warsaw office Franciszek Hutten-Czapski, and Jeronimo Martins Polska corporate affairs director Alfred Kubczak.

Morawiecki: We bet on innovativeness and exports. The deputy PM believes the Polish economy’s fuel has run out - including demographic reserve and simple adoption of Western technologies. According to MinDev’s responsible growth plan, to presented to the government today, Poland is to strengthen industry and support innovativeness in key sectors including automotive and shipbuilding. The new policy is set to include public procurement and new exporters’ support system. Morawiecki wants to strengthen mechanisms increasing private savings.

Belka: China and central banks threaten global economy. The central bank governor believes China’s economy has to slow down because external demand for Chinese products cannot rise at its earlier pace. Meanwhile, ultra accommodative monetary policy across the globe resulted in new speculative bubbles. Raising interest rates threatens to burst the bubbles, while keeping rates at ultra low levels limits room for response to potential crisis. Belka believes low rate of investments is Poland’s main problem, not low savings rate, with tightening budget deficit being the easiest way to raise it.

Szczerski: migration crisis threatens EU’s unity. According to the presidential minister for international affairs, member states are downgrading the union’s internal barriers for guarantees of increased protection to their external interests. The EU’s inefficient response to the immigration crisis questions validity of this strategy. In the worst case scenario the member states could opt for protectionist actions not only regarding the immigration policies, but also in terms of the common market. Strengthening the EU’s external borders is a necessity if Europe wants to stop these trends.

Raczkowski: MinFin’s three ways to seal tax system. The first element of the reform would be legal changes giving the tax administration a tool to question transactions aimed at tax avoidance, such as the proposed clause against tax evasion. Unification of tax and toll administrations into a single treasury administration is the second step, and it is expected to start operating in early 2017. The third package of reforms will be aimed at increasing usefulness of IT tools available to the ministry.

VAT revenue on the rise. Answering questions, Raczkowski estimated tighter tax system would increase tax revenue in 2017 from PLN 5 bln in a pessimistic variant to PLN 15 bln in an optimistic one. The minister added his office is looking into possible introduction of two VAT tax rates: a 5 per cent one and a 20 per cent one. Pressured by Senator Marek Borowski he also said January 2016 VAT revenue is about PLN 2.4 bln higher than a year earlier. 


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Łukasz Lipiński
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Łukasz Lipiński
PI Alert

EU summit: Member States launch discussion on financing joint defence initiatives

State of play

Leaders approved appointments to top posts. At the EU summit that ended on Thursday night, they nominated Ursula von der Leyen for a second term as head of EurCom, former Portuguese Prime Minister António Costa as head of EurCou and Estonian Prime Minister Kaja Kallas as head of EU diplomacy. Italian Prime Minister Giorgia Meloni abstained from voting for von der Leyen and voted against Costa and Kallas. This means that Meloni is preparing for tough negotiations and may demand a high political price in return for his party's support for von der Leyen in her approval in the EurParl. Prime Minister Viktor Orbán voted against von der Leyen and abstained on Kallas.

They adopted the Union's strategic agenda for 2024-2029. Over the next five years, the Union's goals include a successful digital and green transformation by "pragmatically" pursuing the path to climate neutrality by 2050. Another objective is to strengthen the EU's security and defence capabilities.

Von der Leyen spoke of EUR 500 billion for defence over a decade. This was the EurCom estimate of needed EU investment presented by its head at the EurCou meeting. Poland and France were among the countries that expected the EurCom to present possible options for financing defence investments before the summit, such as EU financing of common expenditure from a common borrowing. This idea was strongly opposed by Germany and the Netherlands, among others. In the end, von der Leyen decided to postpone the debate until after the constitution of the new EurCom, i.e. in the autumn. And the summit - after von der Leyen's oral presentation - only launched a preliminary debate on possible joint financing of defence projects.

Poland has submitted two defence projects. These might be co-financed by EU funds. On the eve of the summit, Poland and Greece presented in writing a detailed concept for an air defence system for the Union (Shield and Spear), which Prime Ministers Donald Tusk and Kyriakos Mitostakis had put forward - in a more general form - in May. In addition, Poland, Lithuania, Latvia and Estonia presented the idea of jointly strengthening the defence infrastructure along the EU's borders with Russia and Belarus. Poland is pushing for the EU to go significantly beyond its current plans to support the defence industry with EU funds and agree to spend money on defence projects similar to the two proposals. But EU states are far from a consensus on the issue.

Zelensky signed a security agreement with the Union. The document, signed by President Volodymyr Zelensky in Brussels, commits all member states and the EU as a whole to "help Ukraine defend itself, resist efforts to destabilise it and deter future acts of aggression". The document recalls the EUR 5 billion the EU intends to allocate for military aid and training in 2024 (in addition to bilateral aid from EU countries to Kyiv). It says that "further comparable annual increases could be envisaged until 2027, based on Ukrainian needs" i.e. it could amount to up to EUR 20 billion. Ukraine's agreement with the EU comes on top of the bilateral security "guarantees" Ukraine has already signed with a dozen countries (including the US, UK, Germany, France, Italy). As Prime Minister Donald Tusk confirmed in Brussels, talks are also underway between Ukraine and Poland on the text of mutual commitments on security issues.

PI Alert

KO wins elections to the European Parliament

KO received 38.2 per cent of the vote and PiS 33.9 per cent, according to an exit poll by IPSOS. Konfederacja came in third with 11.9 per cent, followed by Trzecia Droga with 8.2 per cent, Lewica with 6.6 per cent, Bezpartyjni Samorządowcy with 0.8 per cent and Polexit with 0.3 per cent. According to the exit poll, KO gained 21 seats, PiS 19, Konfederacja 6, Trzecia Droga 4 and Lewica gained 3. The turnout was 39.7 per cent.

According to the European Parliament's first projection, the centre-right European People's Party (EPP), which includes, among others, PO and PSL, will remain the largest force with 181 MEPs in the 720-seat Parliament. The centre-left Socialists and Democrats (S&D), whose members include the Polish Lewica, should have 135 seats, whereas the liberal Renew Europe club (including Polska 2050) will have 82 seats. This gives a total of 398 seats to the coalition of these three centrist factions (EPP, S&D and Renew Europe) on which the European Commission under Ursula von der Leyen has relied on so far. The Green faction wins 53 seats according to the same projection, the European Conservatives and Reformists faction (including PiS) 71 seats and the radical right-wing Identity and Democracy 62 seats.