Credit Manager Magazine 9/2021

61 CREDIT MANAGER MAGAZINE WRZESIEŃ / SEPTEMBER 2021 ANALYSIS We would expect the government to water down if not give up on some its policy objec- tives in return for the securing of support of smaller parliamentary groupings and inde- pendent MPs to pass legislation. After all, PiS will be eager to put off elections for as long as possible, even if a minority government might in the end be difficult to sustain over a longer period. In recent weeks, before the loss of its majority in parliament, the government had passed a bill reducing the room for property restitu- tion claims and was forced by the European Court of Justice into an about-face over a dis- ciplinary chamber for Supreme Court judges. Checks and balances prevail restraining pace of institutional weakening Here, encouragingly for Poland’s credit out- look, checks and balances restricting the pace of institutional backsliding still hold, among them the government’s current lack of a Sejm majority as well as opposition control of the Senate. More importantly, Poland’s dependence on EUR 58.1bn in EUmonies, equivalent to more Levon Kameryan Is a senior analyst in sovereign ratings with Scope Ratings based in Frank- furt, Germany and lead sovereign analyst for central and eastern Euro- pe. Levon graduated with a M.Sc. in International Economics and Public Policy from the University of Mainz in 2016. Levon worked previously as an economist at the Central Bank of Armenia and Deutsche Bank. Dennis Shen, CFA Is a macroeconomist and a Director in sovereign ratings with Scope Ra- tings in Berlin, Germany. He is the Agency’s primary sovereign analyst for Poland. Before he joined Scope in 2017, Dennis was European Eco- nomist with Alliance Bernstein in London. Dennis graduated from the MPA in International Development from the London School of Econo- mics and completed undergraduate studies at Cornell University. than 10% of 2021 GDP as part of the Recovery and Resilience Facility, alongside on further 2021-27 EU multiannual budget financing, constrain authorities’ room for manoeuvre. Dependence upon EU funds should encour- age PiS to respect recent ECJ rulings and EU decisions on the rule of law ultimately, even if after frequent forced reversals of policies. Delays of fiscal consolidation and impediments to economic programme One concern, however, is that controls over government expenditure might be relaxed, with a minority PiS government tempted to delay fiscal consolidation because of political considerations. A recent outsized 60% pay hike for legislators – which went into effect on 1 September – is one such example. The lack of a governing majority might ad- ditionally impede the government’s capacity to fully implement its economic programme – even the flagship Polish New Deal under its existing form – which is important for the longer-term return of Poland to robust pre-crisis economic growth rates. Figure 1: 2021/22 growth forecast for Poland by forecasting institution and date of forecast, % Consensus reflects the Focus Economics consensus reports. Source: Focus Economics, IMFWEO, European Commission, Scope Ratings GmbH “More importantly, Poland’s dependence on EUR 58.1bn in EU monies, equivalent to more than 10% of 2021 GDP as part of the Recovery and Resilience Facility, alongside on further 2021-27 EU multiannual budget financing, constrain authorities’ room for manoeuvre.”