Bronislaw Komorowski’s narrow victory in Poland’s presidential run-off on Sunday – giving the centre-right Civic Platform both the president and prime minister’s roles – opens the way for vital economic reforms and deficit-cutting, analysts said on Monday.
But they warned that concerns about damaging its support in advance of local and parliamentary elections might make the Civic Platform-led coalition shy away from strong austerity measures for the time being.
In a more nail-biting contest than expected, final results on Monday showed Mr Komorowski, former speaker of Poland’s lower house who became acting president in April, won 53 per cent of the vote, against 47 per cent for Jaroslaw Kaczynski, head of the conservative Law and Justice party.
Investors cheered the result, with the zloty up sharply against the euro. Markets tended to welcome Mr Komorowski’s victory because it removes the legislative gridlock under president Lech Kaczynski – who vetoed or threatened to veto some Civic Platform reform proposals.
The government sets economic policy in Poland – but the president has veto powers and a big say in foreign policy.
Analysts warned that the coalition as a result no longer had any excuse not to work towards ambitious reforms.
“The government has, until now, skilfully used the president, and the menace more than the reality of the veto [as a reason] for not doing too much,” said Aleksander Smolar, head of the Batory Institute, a public policy think-tank. “Now this argument is over.”
Poland was the only European Union country to avoid recession last year, but spending and unemployment costs pushed the budget deficit to more than 7 per cent of gross domestic product. The deficit is expected to stay at the same level this year.
Government debt is also nearing a ceiling of 55 per cent of GDP which, under Polish law, would trigger automatic spending cuts.
The challenge for prime minister Donald Tusk’s coalition is to reduce the deficit, while continuing modernisation – including building much-needed roads.
With local elections due in autumn, and parliamentary elections by October 2011, it will be wary of antagonising voters by cutting spending too far – especially given Mr Kaczynski’s strong showing on Sunday.
“The parliamentary election campaign starts today,” said Ryszard Petru, chief economist with Poland’s Bre Bank.
The government is likely to pursue plans to limit annual rises in discretionary public spending – about a quarter of the budget – to 1 per cent.
It faces more delicate challenges, notably reform of a social security system for farmers – sensitive for its junior coalition partner, the agrarian Polish People’s party. Another task is to reform the overstretched healthcare system.
A Komorowski presidency is likely to mean Poland will continue its rapprochement with Russia, and attempts to take a leading role in the European Union. It prepares to assume the EU’s rotating presidency for the first time in the second half of next year.
“The result will give the government a lot more confidence to pursue an activist European and foreign policy – with a special emphasis on its presidency, which it takes very seriously,” said Pawel Swieboda, a former foreign ministry official, now head of the Demos Europa think-tank.
Mr Kaczynski stood in place of his twin brother, former president Lech Kaczynski, who was killed in April’s air crash that claimed 96 of Poland’s political, military and civic leaders.
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