NBP will report the result forecasts to the MF? The bank criticizes the new regulations

The National Bank of Poland negatively refers to the proposal of the Ministry of Finance, which would oblige the bank to transfer MF, among others financial plans and every month forecast of the annual result – the Central Bank said in the opinion to the bill. According to the NBP, the Ministry of Finance should assume no payment from the NBP profit in the draft budget each time.

It is a draft amendment to the NBP Act, under which the NBP would start the transfer of MF financial plans from 2026 together with a three-year forecast for 2027-2029.

The project also states that the Minister of Finance will have (starting from 2025) every month, approved by the MPCs of current information on the expected implementation of the NBP financial plan for the whole year.

“(…) The National Bank of Poland negatively refers to the amendments proposed by the Minister of Finance in the Act of 29 August 1997 on the National Bank of Poland” – it was written.

In the opinion of the NBP, the current, based on many years of practice, the method of cooperation between the MF and the NBP in the scope of preparing the state's financial plans is appropriate and does not require a change in generally applicable regulations.

“The incidental nature of the Ministry of Finance failure to comply with due diligence in the field of updating the information used in the preparation of the draft budget act in December 2023, confirmed by the findings of the Supreme Audit Office, cannot result in NBP with additional obligations, in particular the obligations specified for the Ministry of Finance and the Public Sector. foreign exchange reserves, as well as in the implementation of monetary policy (…) ” – wrote in the opinion of the NBP.

The Central Bank believes that the proposals contained in the project differ from the properties of the subject of the regulation, because they omit the existence of probabilistic factors affecting the final financial result of the Central Bank. Therefore, the more reasonable solution according to the NBP is that the Ministry of Finance in the draft budget is taking a cautious assumption about the lack of payment from the NBP profit each time.

“The proposed solutions do not therefore take into account the risk of the projection of the financial result of the Central Bank. What's more, imposing on the NBP the obligation to transfer monthly to the Ministry of Finance the expected performance of the NBP financial plan for a given year may give the impression of exerting exerting exerting the NBP organs of the pressure of achieving the indicated profit. Therefore, it is definitely a more reasonable solution for the Ministry Payments from the NBP profit ” – it was indicated.

In the opinion of the NBP, the opinion on the opinion of the NBP omits the actual needs of the Central Bank, as it does not introduce provisions giving the possibility of taking action in covering NBP losses, which according to the justification of the project aroused anxiety of the Council of Ministers.

“Also, there is a lack of provisions giving the NBP the possibility of creating risk reserves other than exchange rate, which would reduce the NBP losses in the future” – added.

In addition, the draft act includes, according to the NBP, the excessive expectations of the Ministry of Finance in the scope of providing information on all positions of the updated financial plan of the NBP, because the only variable needed MF is information about a possible payment from the central bank profit.

In the NBP's opinion, the MF thesis is also questionable that many years of forecasts of the NBP financial result are necessary to prepare a long-term macroeconomic scenario or a medium-term budget and structural plan.

“For over 20 years, the government has been preparing many years of macroeconomic forecasts and budget forecasts for the needs of economic management in the EU without using the many years of financial forecasts of the NBP. Bearing in mind the uncertainty of the forecast of this result, which increases with the extension of the forecasting horizon, it is justified (…) NBP profit ” – says the NBP.

According to the NBP, the draft assumes the introduction of such amendments to the Act on the NBP, which can be considered a limitation of the independence of the central bank and its information and operational autonomy.

“The proposed changes, imposing unilateral obligations on the NBP in a disproportionate way, can also be seen as a tool for the government's supervision over the central bank, which is incompatible with constitutional and guaranteed in the primary law of the European Union the standards of the independence of the central bank. The freedom of making decisions by the central bank requires that the central bank has control over what information and when entities ” – assesses the NBP.

“The proposed obligation of monthly reporting to a certain extent limits this autonomy because it imposes external information framework and may force the bank's strategy or investment plans to be disclosed earlier, which weakens the position and independence of the central bank, and may significantly negatively affect the effectiveness of the implementation of this strategy and plans” – added. (PAP Biznes)

Tus/ Ana/