| Global Insight Perspective | | | | Significance | Official results confirm that the conservative Law and Justice (PiS) party has won the 25 September elections, and the party has proposed Kazimierz Marcinkiewicz as its candidate for prime minister, rather than party leader Jaroslaw Kaczynski. | | Implications | Earnest efforts to form a coalition can now be embarked upon, and the new government's task is likely to be to review the 2006 budget draft approved yesterday by the outgoing government. The PiS is denying that the proposal of an alternative prime minister is an attempt to boost support for PiS' presidential candidate Lech Kaczynski, after initial polls showed he was closing the gap on the race leader. | | Outlook | Marcinkiewicz is likely to make a strong leader, but it cannot be ruled out that Jaroslaw will take on the role at some point. Before that, discussions on the 2006 budget and the new government programme will take priority, with enough stumbling blocks on economic and social policy to make this a hard task, despite the considerable majority the new government will command. | Official results have shown the conservative Law and Justice (PiS) party is the winner of the 25 September elections, netting 26.99% of the vote. Its likely coalition partner, the Civic Platform (PO) party, took second place with 24.14% of the vote. The two will fall just short of a constitutional majority in the 460-seat Sejm, with 155 and 133 seats respectively. The outgoing ruling Democratic Left Alliance (SLD) has been pushed into fourth place with 11.31%, behind the nationalist, populist Samoobrona (11.41%). The only other parties to make the 5% threshold were the small right-wing and populist League of Polish Families (LPR; 7.97%) and the Polish Peasants Party (PSL; 6.96%), plus the two representatives for the German minority. The winning party has proposed a candidate for prime minister, key party founder and leader party member Kazimierz Marcinkiewicz. The PiS said it consulted with the PO on the prime ministerial candidate, with leader Jaroslaw Kaczynski pointing to Marcinkiewicz as the man most likely to effect the speedy formation of government. For the remainder of the cabinet, only the PO's Jan Rokita appears to be confirmed, and Kaczynski was keener to ensure the government programme is agreed first. However, Global Insight has outlined some of the potential candidates in its previous analysis (see Poland: 23 September 2005: Election 2005- Polls Predict End of the Line for Polish Left-Wing Government). Tough Talking on Budget The 2006 budget draft was approved yesterday but is unlikely to pass muster in its present form with the incoming government parties. Outgoing Prime Minister Marek Belka had recognised this problem; it was one of the reasons he pushed for elections to be called earlier this year, to allow a new government a clear run at its own budget. However, the debates will be messier, and the PO and the PiS have not had sufficient time to square their respective positions on budget issues in the post-election period. Aside from their differences on how to draft a new budget, they object to some of the expenditure provisions in the current draft. The budget works on the assumption of a budget deficit of 3.3% of GDP (see Poland: 7 September 2005: Budget 2006: Draft Budget Parameters Approved by Polish Cabinet), with - 221.803 billion zloty (US$70.73 billion) in expenditures;
- 189.228 billion zloty in revenue, with both rising 5.8% on 2005 figures;
- A deficit of 32.575 billion zloty, up from 30.833 billion zloty in 2005.
Belka remained confident that the budget deficit would fall to 3% of GDP by 2008, in order to keep to targets agreed with the European Commission. However, the main premise of these is to ensure readiness for adoption of the euro, which the PiS is far less enthusiastic about than the PO, having pencilled in a 2015 date for a public referendum on adoption, rather than the 2010 that is currently assumed. Considering the persistent breach, by 10 member states in 2004, of the 3% ceiling for deficits under Eurozone rules, according to Eurostat figures released yesterday, there is little incentive to keep to tight spending restrictions. Changes Expected Marcinkiewicz has already spoken of 'far-reaching' changes to the draft, including the liquidation of certain government agencies and funds. The PiS wants to lower the deficit to 30 billion zloty, and has not ruled out increasing tax revenues, even though the PO would be unlikely to agree to any such manoeuvre. The PO believes the outgoing Finance Minister, Miroslaw Gronicki, has been 'optimistic' with revenue forecasts for 2005. However, the PiS also wants to change the expenditure patterns, to provide bonuses for payments to families, and could possibly shift spending allocated to research and development to do so. The new economy minister has not been agreed yet, but it will be hoped that the PO will be charged with the task as it has already drawn up a budgetary consolidation plan. The PiS has suggested Cezary Mech as a potential Finance Minister, having drawn up its fiscal programme. The PiS also wants to ensure that the PO is prevented from steps towards the flat-tax system it favours. Outlook and Implications There is more than one influence feeding into the negotiations between the PiS and the PO. The PiS is hoping to score a dual victory in the presidential elections in October. Its candidate, the controversial mayor of the Polish capital Warsaw, Lech Kaczynski, is also the brother of PiS leader Jaroslaw. The two have said that, should PiS win both ballots, they would not hold the posts of prime minister and president at the same time. Lech trails the presidential race-leader, PO's leader Donald Tusk, by some distance. However, this distance closed as expected upon the PiS' election win, and the party could be trying to influence the electorate into thinking Lech is going to win the vote by proposing an alternative for prime minister in advance. Marcinkiewicz is adamant he is committed to the full term as prime minister, and would make a strong leader with good standing in his party. However, Kaczynski may tire of directing the party rather than the government, particularly if his brother Lech fails to win the presidency. In the meantime, the two parties are to work on the new budget and government programme even as they remain rivals in terms of the presidency. Shifts in expenditure can be expected, with most likely more attention on social policy with the possibility science and research funds will be reduced.
| |
