Morawiecki: Poland can marshall broad set of domestic capital to speed growth

Poland must activate a wide variety of domestic capacities and domestic capital to assure balanced economic growth that can reduce or reverse any external imbalances, Poland’s newly appointed deputy PM and Minister of Development, Mateusz Morawiecki, told PAP in an interview.

“What I strongly care about is balanced growth, that is growth that not only takes into account the balance in public finance, but also an increasing balance in the current account, which reflects the degree of our dependence on foreigners,” Morawiecki said.

“I believe that through internal factors, stronger investments and consumption that sinks through to production and services generated in Poland, we will get a GDP growth mix that will be safe mid- and long-term.”

With Poland’s negative net investment position at 66% of GDP and with some PLN 90 bln in dividends and interest “leaking” abroad each year, Poland must “stimulate domestic growth factors” to enact a gradual reversal of those external deficit drivers, Morawiecki said.

For Morawiecki, Poland needs to “set the economy in motion” starting the matter in “first gear” and only gaining the type of momentum that warrant “a weaker, but faster gear” with dovetailing drivers, said.

Domestic capital begins first and foremost with PLN 200 bln in corporate money lying idle in bank accounts plus a broad set of government agencies and economic policy tools which can be refashioned to better serve investments and exports.

If companies put PLN 50 to 70 bln of the idle savings into motion, Poland can reap a “huge stimulus” over the course of several years.

“The money is there; firms aren’t setting them in motion, partly because there are no good large investment opportunities,” Morawiecki told PAP. “We will generate such good opportunities.”

A broad array of state agencies and institutions can be built out with a broadened mandate to fill in existing holes in state economic policy, Morawiecki says. Public procurement law can be tipped to better enable Polish firms. A deregulation drive could lift certain constraints.

Existing export support agencies and programs bear “not too broad” of a scope and Morawiecki will set out to develop a “fully fledged export support agency, the kind you see functioning in many European Union economies.”

State development bank BGK, infrastructure investment vehicle PIR, the diplomatic corps, the Industrial Developoment Agency (ARP), the export insurer KUKE, the FDI promotion agency PAIiIZ – can all start to play from a unified game book. “We need to make use of those institutions, strengthen their prerogatives and functions.”

Morawiecki was named deputy Prime Minister and head of a new Ministry of Development, the home base for economic policy that will coordinate efforts at the Finance Ministry, the Energy Ministry, the Treasury Ministry and elsewhere.

Poland escaped the EU’s excessive deficit procedure in June 2015 despite an end-2014 deficit to GDP ratio at 3.2%, an infraction vis-a-vis the 3% cap due to pension reform costs. The European Commission said at the time it expected the deficit to fall to 2.7% in 2015.

jba/ seb/ gty/ ami

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