WARSAW / Bloomberg
Poland’s new government plans to harness 1 trillion zloty ($254 billion), or nearly half of the country’s annual economic output, for investment in manufacturing and innovation to help the nation catch up with richer European Union neighbours.
The government is due to discuss the proposal, drafted by Development Minister Mateusz Morawiecki, the former chief executive officer at Poland’s third-largest bank, at its cabinet meeting on Tuesday. Funding for the multi-year program will come from 480 billion zloty in EU transfers through 2020, as well as savings of domestic companies, excess liquidity of banks, loans from international institutions as well as from state-owned investment vehicles, according to Puls Biznesu daily, which saw a copy of the report.
Morawiecki has argued that Poland’s economic development has become too dependent on foreign financing and cheap production, which is keeping wages in the US$550 billion economy low. The three-month-old government came to power promising to boost the state’s role in the economy and provide incentives for local, mostly small- and medium-sized companies, to invest and compete abroad.
“If the plan counts on the public sector building new factories, it’s a recipe for leaving our kids in debt,” Witold Orlowski, director of the Warsaw University of Technology Business School, told Polsat News television. “Poland’s problem isn’t spending money, it’s spending money rationally to foster economic development.”
Morawiecki’s plan rests on a “five-pack” of re- industrialization, innovation, capital, export and expansion as well as social and regional development, according to Puls Biznesu. The former chief of Bank Zachodni WBK SA, a unit of Banco Santander SA, has said he wants Poland’s economic growth to accelerate to 4 percent next year and in 2018, while PM Beata Szydlo seeks expansion of more than 5 percent.
The government needs to accelerate the economy, which grew 3.6 percent last year — one of the fastest rates in the 28- nation EU, to help pay for its ambitious family benefit program. The European Commission expects the new spending to widen the nation’s budget deficit beyond the bloc’s 3 percent of gross domestic product cap next year, while Standard & Poor’s downgraded Poland last month.