Poland takes steps in direction of unlocking EU restoration funds

Poland is on monitor to unblock billions of euros of EU restoration funds earlier than the tip of the yr, its finance minister has stated, insisting that negotiators had made important progress in talks with Brussels previously month.

The EU has but to advance the primary tranche of money beneath Poland’s Covid-19 restoration plan, which totals €36bn in grants and loans, after approving the general programme in June. Poland is looking for to persuade Brussels that it has instituted reforms which are enough to ensure the independence of judges, a key demand from the European Fee.

Magdalena Rzeczkowska stated Warsaw was “on the best way to get this cash” and that her authorities might lodge a primary cost request — for €2.85bn in grants and €1.37bn in loans — earlier than December.

“What’s within the newspapers is one factor,” she stated in an interview with the Monetary Occasions, including that whereas some members of the European Fee had pushed for Poland to do extra to strengthen the rule of regulation, “so far as I do know . . . there is no official doc which states that we didn’t do the reform correctly”.

Brussels insists that to get its money, Warsaw should show it has instituted a collection of reforms to its system for disciplining judges. The situations embrace a requirement that instances towards judges are adjudicated by an neutral court docket, and that judges affected by previous disciplinary chamber rulings have the fitting to a overview of these selections.

The fee declined to touch upon the funding negotiations with Poland however stated that with out the fulfilment of rule-of-law milestones associated to judicial independence, “no cost is feasible”.

Opposition teams forward of elections subsequent autumn have accused the rightwing authorities of prime minister Mateusz Morawiecki of sacrificing EU cash so as to preserve management over Poland’s judiciary.

“With out fulfilling the obligations that Morawiecki himself imposed on his authorities, together with the restoration of the rule of regulation, the federal government is not going to obtain cash,” stated MEP Andrzej Halicki, who represents Poland’s opposition Civic Platform occasion and led a delegation from the European parliament that visited Warsaw final week.

Some EU officers query whether or not Poland has gone far sufficient with its reforms, however senior European policymakers are additionally desirous to unlock the funding because the nation has led the welcome of refugees after Russia’s invasion of Ukraine and the push for a tricky response to Moscow.

The finance minister stated Poland was on a distinct monitor than Hungary, which has not gained EU backing for its restoration plan partly due to rule- of-law violations within the awarding of public contracts. “Poland is among the better of the EU, so I don’t worry that one thing might be fallacious with our transparency and anti-corruption procedures,” she stated.

Individually, Rzeczkowska forecast that Poland would keep away from a recession in 2022, regardless of a 2.3 per cent contraction in gross home product within the second quarter. The finance minister stated manufacturing knowledge and different indicators pointed to a return to development within the third quarter.

Nonetheless, she acknowledged that the economic system might contract once more within the remaining quarter if Europe suffers a winter power disaster.

Polish banks are threatening to sue the federal government for its August determination to permit mortgage holders fighting excessive power payments to droop funds for as much as 4 months a yr, at a time when Poland’s central financial institution has raised charges from near-zero final autumn to six.75 per cent.

Warsaw has introduced a 2023 funds that features a report improve in army spending within the wake of Russia’s invasion of Ukraine. Rzeczkowska stated a crackdown on tax evasion had raised revenues.

“We will afford such a giant funds for this yr and subsequent yr as a result of we have now managed to tighten the tax system to successfully fight tax fraud,” she stated.

Rzeczkowska stated Poland’s skill to borrow was nonetheless robust, reflecting a debt degree of simply 52 per cent of GDP that’s properly inside the EU’s fiscal tips.

Nonetheless, “it’s extra essential to take a look at what isn’t budgeted somewhat than what’s accounted for”, stated Katarzyna Rzentarzewska, chief analyst at Vienna-based Erste Group Financial institution, pointing to latest emergency spending, together with to assist residents address hovering power costs, as borrowing prices rise.

The finance minister insisted the power disaster bolstered Poland’s perception in sustaining its personal forex and financial coverage. “This isn’t precisely a superb second to enter the eurozone,” she stated. “The eurozone has its personal issues.”