• Today Monetary Policy Council member Dariusz Filar attacked Finance Minister Rostowski’s stated ambition to join the ERM2 in H209.
  • The conflict between the Polish government and the NBP about whether the profits of the central bank should be transferred to public finance adds to Poland’s woes.
  • These issues clearly dent Poland’s credibility.

Last week Polish Finance Minister Rostowski somewhat surprisingly said that Poland could join the ERM2 already in the second half of 2009. Today, however, Monetary Policy Council (RPP) member Dariusz Filar in an interview with the Polish daily Rzeczpospolita said Polish ERM2 entry in H209 would be “very risky” as ERM2 should only be joined if there were prospects of fulfilling the Maastricht criteria. It should be obvious to everyone that this is a direct criticism of Rostowski’s comments last week.

We have long been critical about the Polish government’s handling of the euro issue. Not that we disagree with the ambition to join the euro, but rather because the continued insistence on swift ERM2/euro entry is unrealistic and hence likely to dent the credibility of Poland’s economic policy. Filar seems to agree.

Another issue is the conflict between the Polish government and the NBP about whether the profits of the central bank should be transferred to public finance. Prime Minister Tusk has stated again and again that the central bank’s profits should be used to prop up the government budget and has threatened to change the central bank law to make it happen.

It is hard to view the efforts to transfer the central bank’s profits to the government’s coffers and especially the threat to change the central bank law as anything else than a direct attack on the independence of the central bank. That in itself would make it difficult for Poland to join the euro as a key condition is independence of the central bank. Unfortunately the conflict reminds us of the very damaging conflict between the NBP and previous Socialists and populist governments about the exact same issue.

We are somewhat puzzled by the actions of the Polish government as it should be obvious that these “games” are harming the credibility of economic policy in the financial markets and are likely to upset the European Commission and the ECB.

The somewhat desperate attempt of the Polish government to get its hands on NBP’s profits raises the question whether public finance in Poland is in a worse state than the Polish government until now has wanted to acknowledge – and if so, why insist that ERM2 is just around the corner when it is so obvious that Poland will not fulfill the Maastricht criteria in either 2010 or 2011?