CEEMEA Exclusive: Polish DMO Head Czarnecki: Expect President Duda to Sign Budgetary Act

30 January 2024

By David Barwick – VIENNA (Econostream) – Polish President Andrzej Duda will probably sign Prime Minister Donald Tusk’s budget, in the view of Karol Czarnecki, Director of the Public Debt Department at the Polish Ministry of Finance.

In an interview recently with Econostream (transcript here), Czarnecki said that it was entirely possible that the share of foreign demand for Polish government debt would rise steadily to over 20%.

Asked if he was worried that Poland could lapse into legislative paralysis if Duda were to refuse to sign the 2024 budget, Czarnecki replied that such a scenario was unlikely, ‘also because in many respects it’s [the budget] based on assumptions of the predecessor government’ and is thus ‘a kind of continuity of the previous government's policies in many very important areas.’

‘From my point of view, there are no material reasons why this Budgetary Act could be rejected, not to mention the fact that under the Polish legal system, the president is obliged to sign the Act, because the budget is crucial for the operation of the state’, he said.

‘There are a lot of Acts that may be stopped in the legislative process by objections of the president, but if the Budgetary Act is prepared according to the rules and by the relevant dates, it may not be rejected by the president’, he added.

Political tensions would thus ‘most likely’ subside, leaving demand for Polish government bonds robust, he said.

Czarnecki backed recent comments by Poland’s finance minister suggesting that foreign investors would buy up a larger share of Polish government debt.

What level the share would rise to going forward was ‘difficult to predict, but at the moment I would say we’re getting about 14% foreign investors in our domestic debt’, he said. ‘That means, keeping in mind the experience of previous years, that there should be room even to double that, but not overnight and only under favourable conditions, with no negative external shocks. So, from our point of view, stable, steady growth to a level above 20% is absolutely possible.’

Conditions were currently quite good for foreign investors interested in purchasing Polish debt, and the Public Debt Department would seek to attract them in greater numbers, he said.

‘[N]ow that we have a relatively predictable trajectory with respect to the policies of major central banks as well as to market conditions in terms of the real sector in Poland and the global economy, a lot of uncertainty has evaporated’, he said.

‘So, from our point of view, conditions are now particularly favourable for foreign investors to get into Polish debt, especially given that the discrepancy between the rates is going to be rather stable and the stability of our currency adds certainty to investment portfolios’, he elaborated.