Bloomberg News

Poland Re-Elects Tusk on Economy as Crisis Looms, Poll Shows

October 09, 2011

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Oct. 9 (Bloomberg) -- Polish Prime Minister Donald Tusk probably won a second term in office as voters count on him to guide the European Union’s largest eastern member through Europe’s debt crisis.

Tusk’s Civic Platform party won 39.6 percent of the vote, while its main rival, Law & Justice, won 30.1 percent, according to an exit poll by TNS OBOP released by public television TVP. Partial results are due after midnight. If the exit poll figures

are confirmed, Civic Platform will have 212 deputies in the 460-seat lower chamber of parliament, the pollster said.

Tusk averted recession during the global financial crisis and pledged to cut the budget gap to within 3 percent of economic output next year. The victory would make him the first Polish premier to win a second term since the end of communism 22 years ago.

“This was a vote for stability, responsibility and a safe pair of hands,” said Krzysztof Bobinski, president of the Unia & Polska research foundation, in a telephone interview after the exit poll was released.

Controlling public finances will be the greatest challenge for the administration that emerges from today’s election, Jan Amrit Poser, chief economist at Bank Sarasin, said at a conference in Warsaw on Oct. 7. The general government deficit soared to 7.9 percent of gross domestic product in 2010, exceeding the EU’s 3 percent limit for a third consecutive year.

Zloty Slump

The zloty slumped about 10 percent against the euro in the third quarter, making it one of the worst performers among more than 170 currencies tracked by Bloomberg, on concern Europe’s debt crisis will slow economic growth.

The zloty’s tumble sent local-currency government bonds down 15.7 percent in dollar terms last quarter, the third-worst returns worldwide after Greece and Hungary, according to indexes of debt due in more than one year compiled by the European Federation of Financial Analyst Societies and Bloomberg.

The ruling party’s victory is “good news” for investors and will calm financial markets, whose volatility last week “may have betrayed some nervousness about the outcome,” Deputy Finance Minister Dominik Radziwill told reporters in Warsaw.

Poland was the only member of the 27-nation European Union to avoid recession at the height of the economic crisis in 2009. The government forecasts 4 percent growth next year, compared with the International Monetary Fund’s prediction of 3 percent expansion.

‘Pretty Good’

Three other parties won enough support to exceed the 5 percent threshold for gaining seats in parliament. The Peasants’ Party, Tusk’s junior coalition partner, garnered 8.2 percent, which would give it 27 seats, enough to form a majority government with Civic Platform.

“The results are looking pretty good -- as long as Civic Platform manages to continue the present coalition,” said Raffaella Tenconi, an economist at Bank of America Merrill Lynch in London. “That would be a sign of predictability and stability, and that’s what the markets want to see.”

The Peasants Party will give “serious consideration” to its coalition options as the results present several possible scenarios, its leader Waldemar Pawlak said. The Palikot Movement, founded by former ruling-party politician Janusz Palikot, received 10.1 percent in the exit poll, and may support some of Tusk’s policies. The Democratic Left Alliance won 7.7 percent of the vote, according to OBOP.

Civic Platform’s performance compares with its 41.5 percent tally in the 2007 election, when Law & Justice got 32.1 percent, the Democratic Left Alliance 13.2 percent and the Peasants Party 8.9 percent.

‘Twice as Fast’

Palikot, a former vodka distiller, clashed with Tusk last year. He urges a quicker overhaul of public finances by cutting spending on bureaucracy, the Catholic church and pensions. After the vote today, Palikot said he wants to “prod the government toward acceleration.”

“The next government will have to act twice as fast as in the previous four years since the country faces even bigger challenges,” Prime Minister Donald Tusk said today in Warsaw.

Poland, a country of 38 million people, was the biggest net recipient of EU funding in the bloc’s 2007-2013 budget, getting 67 billion euros ($97 billion) in aid to iron out differences between richer and poorer states.

The funding, which helped the Polish economy grow 4.4 percent a year in 2007-2010, may be cut if the country doesn’t reduce its deficit to within the EU limit of 3 percent of gross domestic product next year from 7.9 percent in 2010.

Aid Effect

The EU aid has added an average of 1.5 percentage points to economic growth each year, according to Poland’s Regional Development Ministry, and remains essential for economic expansion as budget cuts may limit consumer demand and public investment. The government estimates 4 percent growth next year.

A phone poll by Warsaw-based pollster Homo Homini for Polsat television showed the Platform gained 34.9 percent, Law & Justice with 29.6 percent, the Democratic Left Alliance at 12.8 percent, the Peasants Party at 9.9 percent and the Palikot Movement with 9.6 percent.

Final results will be published late on Oct. 11, the Electoral Commission said. According to the Polish constitution, President Bronislaw Komorowski must designate a new prime minister within 14 days of dismissing the outgoing government. The prime minister then has 14 days to present this new cabinet’s program to parliament and win a confidence motion with at least 231 votes in the lower chamber.

--With assistance from Piotr Skolimowski and Monika Rozlal in Warsaw. Editors: Balazs Penz, David McQuaid

To contact the reporter on this story: Dorota Bartyzel in Warsaw at dbartyzel@bloomberg.net Katya Andrusz at kandrusz@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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