Politicians of the current ruling camp, headed by Prime Minister Donald Tusk, already during the election campaign announced that the head of the NBP, Adam Glapiński, would be brought before the State Tribunal. Theoretically, the case is ongoing. Even on Monday, the Sejm Committee on Constitutional Responsibility dealt with it.
Now, however, Bloomberg reports that the Polish government is giving up this battle. According to the agency, Polish authorities fear that the legal dispute could discourage foreign investors.
Bloomberg quotes anonymous informants who say that “the ruling party concluded that pursuing the matter would provide little, if any, political benefit.”.
“The need to finance Poland's growing budget deficit also played an important role. Some government officials fear that tensions with the central bank could undermine the confidence of bond investors,” the article says.
The National Bank of Poland lowers interest rates and refutes its arguments
While during the parliamentary campaign politicians of the Civic Coalition could gain support from voters by criticizing the head of the National Bank of Poland for maintaining high interest rates, this argument has fallen out of favor in recent months. There have been several reductions behind us, and analysts are predicting more.
Adam Glapiński himself recently talked about the financial hole in the state budget, which Bloomberg writes about, and suggested that he was helping the government by lowering interest rates.
— The public finance sector continues to have a high deficit. The greatest weakness of the Polish economy, a very big weakness. This year, the deficit is expected to approach almost 7%. GDP. Next year, according to the government's plans, the deficit should decrease slightly, but will still remain very high – said prof. Glapiński.
— The high fiscal deficit obviously limits the space for easing monetary policy. This means that we need to act very carefully and conservatively, he pointed out.
— This persistently high deficit also significantly increases public debt. It is worth mentioning that our interest rate cuts significantly reduce the costs of servicing this debt. According to our bank simulations, the 175 basis point reduction in interest rates that we made this year reduces debt servicing costs by approximately PLN 25 billion in the first two years – he gave the calculations.
However, as we noted in Business Insider Polska in our calculations he did not take into account the fact that the state budget would receive less money through VAT revenues than if inflation were higher. Higher prices mean higher revenues from this tax, so the balance of benefits and losses of the state budget may be negative, i.e. the potential revenues may be less than PLN 25 billion as a result of the decline in inflation.
How does the State Tribunal work?
In the Polish legal system, the institution of the State Tribunal operated from 1921 until World War II. The authorities of the Polish People's Republic formally restored it with the provisions of 1982. Currently, the functioning of the Constitutional Tribunal is regulated mainly by the constitution and a special act. This is a body established to hold the highest state officials accountable for violations of the law committed in connection with the performance of their public functions.
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The State Tribunal may sentence a person to loss of electoral rights and position. In the case of common or fiscal crimes, it may impose penalties and punitive measures provided for in the codes.
Who has the State Tribunal sentenced so far?
It is worth recalling that in the over 100-year history of this institution, only two people have been legally convicted. In 1997, five dignitaries of the Polish People's Republic appeared before the Tribunal of State: ex-minister of finance Andrzej Wróblewski, head of the Ministry of Internal Affairs Gen. Czesław Kiszczak, minister of the internal market Aleksander Mackiewicz, minister of foreign economic cooperation Dominik Jastrzębski and president of the Central Office of Customs Jerzy Ćwiek. Everyone, in connection with the so-called alcohol scandal, also known as “schnapsgate”, they were charged with negligence, inaction and failure to fulfill their duties.
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In 1988, Jastrzębski simplified the rules for importing alcohol, abolishing the obligation to obtain a license to import alcohol “for one's own needs”. Poles quickly took advantage of this legal loophole, bringing huge amounts of spirit into the country. The customs duty for a liter of pure spirit was the equivalent of today's zloty.
As a result, in 1988–1989, approximately 31 million liters of pure spirit were imported to Poland, net of taxes and excise duty. The State Treasury's losses were estimated at the equivalent of today's PLN 2 billion.
They answered before the State Tribunal for the “alcohol scandal”
In December 1989, the president of the Central Customs Office, Jerzy Ćwiek, ordered the destruction of customs documentation related to the import of alcohol. He soon lost his position, but the damage caused by the scandal was irreversible. It was only in 1990 that an alcohol tax was introduced.
Ultimately, the State Tribunal convicted Ćwiek and Jastrzębski. Both of them lost their passive electoral rights for 5 years and were unable to hold official management positions for the same period. The trial did not determine whether they intentionally or short-sightedly reduced budget revenues.
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