OECD entry set for July, Gov't says
"It's a proof of the maturity of the Polish economy," Finance Minister and Deputy Prime Minister Grzegorz Kolodko said Friday of Poland's growing chance to join the Paris-based club of the world's 27 richest nations.
Christian Schricke, head of the OECD's legal department, who was in Warsaw last week, said the only hurdle remaining is for the Polish Parliament to pass legislation that gives authorities wider access to confidential banking information.
Poland's outgoing ombudsman has said the law violates the right to privacy and banks have vigorously opposed the proposal. But Finance Ministry officials say the proposed regulations are needed for Poland to become the third ex-Communist country to join the OECD, following the Czech Republic and Hungary.
Kolodko said OECD membership should boost Poland's image among foreign investors. "The membership will increase the confidence in the future of the Polish economy," he said.
Analysts said that while OECD membership in itself would not immediately open the floodgates of foreign capital flowing into Poland, in the medium and long term it would have a positive effect.
They noted banks would be able to lend at lower rates, Poland would be able to borrow more cheaply on international markets and foreign investors would seek a lower risk premium for investments here.
"Membership of the OECD per se would not affect international investors in a huge manner," said Sean Murphy, Central and Eastern European analyst with Nomura Research Institute in London. "And yet the individual steps that need to be taken to enter the OECD in terms of restructuring the economy ... are very important steps which definitely enhance investment."
Isabel Knight, fund manager with the London-based Polish Investment Co., said OECD membership is not as important as the country's recent upgrade to an investment-grade rating by Standard & Poor's. However, "it's kind of the icing on the cake," she added.
Most analysts agreed OECD membership is more of a psychological step than anything else.
"Poland wouldn't be seen as a high-risk country - not as an emerging market, but as an equal partner," said Emil Onyszczuk, analyst with Polski Bank Rozwoju brokerage house.
"The cost of borrowing will be reduced for Polish banks," said Ramin Habibi, with Cyprus-based Thomson BankWatch, which tracks the banking industry in the region. The Basel-based Bank for International Settlements risk-rates loans for OECD countries at 20%, but for non-OECD countries at 100%.
"I don't think this will mean they (Polish banks) will go rushing out to get more loans," Habibi said, "but it would mean they would be able to raise loans broader at more favorable rates. It will be good publicity for them."
Habibi added that OECD membership may have an immediate favorable impact on syndicated loans. "If the banks are on the ball, they'll probably renegotiate any sort of debt they may have." He noted that after the Czech Republic was admitted to the OECD three large commercial banks renegotiated foreign syndicated loans at more favorable rates.
Poland's OECD admission may also allow the government to borrow at better rates, especially given the recent investment upgrade from Standard & Poor's, analysts noted.
(Kolodko also said Friday he was meeting with a team from ratings agency Moody's, adding the prospect of OECD entry should boost Poland's chances for a rating upgrade. "If I was in Moody's shoes, I would really take into consideration the fact that Poland is almost a member of the OECD," Kolodko said.)
Some analysts expect OECD membership to lure more foreign-based funds here.
"From the larger U.S.-based funds there might be greater allocations," said Christian Faber, in the sales department at Wood & Co. Securities.
Some equity fund managers said Poland's OECD membership would just reaffirm their already positive view of the country.
"For us, I guess the trends that would enable Poland to join the OECD are the ones which make us interested," said Glenn Wellman, with CS Investment Management, manager of the Central European Growth Fund PLC., which has invested $300 million in the region.
Whatever the long-term impact, Poland's OECD membership won't clear the country's economic skies overnight, analysts said.
"I don't expect any stronger investments in Poland in debt instruments, because what will be changed?" said Andrzej Kaczorowski, money market analyst with Raiffeisen Zentrobank. "Will the Polish economy be better because of this fact? No."
Christian Schricke, head of the OECD's legal department, who was in Warsaw last week, said the only hurdle remaining is for the Polish Parliament to pass legislation that gives authorities wider access to confidential banking information.
Poland's outgoing ombudsman has said the law violates the right to privacy and banks have vigorously opposed the proposal. But Finance Ministry officials say the proposed regulations are needed for Poland to become the third ex-Communist country to join the OECD, following the Czech Republic and Hungary.
Kolodko said OECD membership should boost Poland's image among foreign investors. "The membership will increase the confidence in the future of the Polish economy," he said.
Analysts said that while OECD membership in itself would not immediately open the floodgates of foreign capital flowing into Poland, in the medium and long term it would have a positive effect.
They noted banks would be able to lend at lower rates, Poland would be able to borrow more cheaply on international markets and foreign investors would seek a lower risk premium for investments here.
"Membership of the OECD per se would not affect international investors in a huge manner," said Sean Murphy, Central and Eastern European analyst with Nomura Research Institute in London. "And yet the individual steps that need to be taken to enter the OECD in terms of restructuring the economy ... are very important steps which definitely enhance investment."
Isabel Knight, fund manager with the London-based Polish Investment Co., said OECD membership is not as important as the country's recent upgrade to an investment-grade rating by Standard & Poor's. However, "it's kind of the icing on the cake," she added.
Most analysts agreed OECD membership is more of a psychological step than anything else.
"Poland wouldn't be seen as a high-risk country - not as an emerging market, but as an equal partner," said Emil Onyszczuk, analyst with Polski Bank Rozwoju brokerage house.
"The cost of borrowing will be reduced for Polish banks," said Ramin Habibi, with Cyprus-based Thomson BankWatch, which tracks the banking industry in the region. The Basel-based Bank for International Settlements risk-rates loans for OECD countries at 20%, but for non-OECD countries at 100%.
"I don't think this will mean they (Polish banks) will go rushing out to get more loans," Habibi said, "but it would mean they would be able to raise loans broader at more favorable rates. It will be good publicity for them."
Habibi added that OECD membership may have an immediate favorable impact on syndicated loans. "If the banks are on the ball, they'll probably renegotiate any sort of debt they may have." He noted that after the Czech Republic was admitted to the OECD three large commercial banks renegotiated foreign syndicated loans at more favorable rates.
Poland's OECD admission may also allow the government to borrow at better rates, especially given the recent investment upgrade from Standard & Poor's, analysts noted.
(Kolodko also said Friday he was meeting with a team from ratings agency Moody's, adding the prospect of OECD entry should boost Poland's chances for a rating upgrade. "If I was in Moody's shoes, I would really take into consideration the fact that Poland is almost a member of the OECD," Kolodko said.)
Some analysts expect OECD membership to lure more foreign-based funds here.
"From the larger U.S.-based funds there might be greater allocations," said Christian Faber, in the sales department at Wood & Co. Securities.
Some equity fund managers said Poland's OECD membership would just reaffirm their already positive view of the country.
"For us, I guess the trends that would enable Poland to join the OECD are the ones which make us interested," said Glenn Wellman, with CS Investment Management, manager of the Central European Growth Fund PLC., which has invested $300 million in the region.
Whatever the long-term impact, Poland's OECD membership won't clear the country's economic skies overnight, analysts said.
"I don't expect any stronger investments in Poland in debt instruments, because what will be changed?" said Andrzej Kaczorowski, money market analyst with Raiffeisen Zentrobank. "Will the Polish economy be better because of this fact? No."
