Initial responses to Polish government’s emergency fiscal package mixed
Judgement of the government’s 212b zł (€46.8b) emergency economic stimulus proposals have not been universally enthusiastic. Although the full draft of the bill has not been released, economists have already begun to voice their opinions on the subject. After proceedings began on Friday, debate over the bill will continue today in the lower house of the Polish parliament (Sejm), with the Social Dialogue Council (Rada Dialogu Społecznego) offering consultation. According to Jadwiga Emilewicz, Minister of Development, the bill is expected to reach the Council of Ministers by Tuesday 24 March.
Witold Orłowski, professor of economics at Vistula University and the Warsaw University of Technology Business School (Szkoła Biznesu Politechniki Warszawskiej), as well as Chief Economic Advisor at PwC in Poland, says that tax relief and deferrals in paying taxes and ZUS (social security) should be immediate rather than in three months, as outlined, and that the government should take pre-emptive measures instead of focusing on what has already happened. Still, he says, the five pillars Prime Minister Mateusz Morawiecki announced – (1) the safety of employees, 2) financing of companies, 3) support of health services, 4) ensuring financial security and 5) public investments in infrastructure, digitisation and technology) – are basically sound, but that the details of the plan have not yet been unveiled, so it’s difficult to give comprehensive judgement. Professor Orłowski’s main concerns are that the amount proposed will not be enough and that the money will not go to the right places.
Santander Bank points out that 67bn zł of the total 212bn zł is the actual expenditure of the public finance sector (approx. 3% of GDP), 75bn zł comprises liquidity tools from the government and 70bn zł is liquidity support from the National Bank of Poland. They say that the actions presented in the package are all necessary, but it is quite limited in comparison to those of other countries (for example, Germany and Spain at c.15% GDP). Santander also believes that the elimination or suspension of the banking tax – or at least fixing it at a set level – is missing from the government proposal.
Adam Abramowicz, the spokesperson for the Small and Medium-Sized Enterprises organisation (Małych i Średnich Przedsiębiorców), stated that there are two solutions that will allow businesses to survive: automatic renewal of working capital loans and voluntary contributions to ZUS for a period of six months. The Polish Employers Federation (Federacja Przedsiębiorców Polskich) said that ZUS (Social Insurance Institution) should take over the paying of sick leave from the first day of quarantine or illness to the amount of 100% of the person’s wage, not after a total of 33 days. Marek Kowalski, head of the Federation, calculated that this would cost the government about 1.8bn zł.
Andrzej Malinowski, President of Employers of Poland (Pracodawcy RP), highlighted the importance of deferring public levy payments, saying it is better for the government to wait to collect taxes than to have an employer to shed staff due to a lack of funds. Łukasz Kozłowski, chief economist of the Federation of Polish Enterprises, proposed the implementation of a fiscal impulse to monitor the macroeconomic effects of the fiscal package, as a few countries have done.
Grzegorz Baczewski, Director General of Polish Confederation Lewiatan (Konfederacja Lewiatan), expressed his concerns about the package. Judging from the details of the announcement, he said that the Polish government and President Andrzej Duda may not fully appreciate the serious implications of the outbreak on the economy.
Borys Budka, leader of the largest opposition party Citizens Platform (Platforma Obywatelska – PO), says he is waiting for concrete details. Featured on Polsat’s programme Wydarzenia i Opinie, Budka mentioned he is calling for a meeting of the Parliament (Sejm) to discuss ways of helping Poles and the economy. PO’s plan, according to Budka, is also around 200bn zł but consists of specifics that will get better results, such as 20bn zł for health services, an indefinite period of benefits for Poles who need to look after children while the schools are closed, and a total exemption from paying social securing contributions to ZUS.