Poland looks for new central bank president
Hanna Gronkiewicz-Waltz's decision to quit the National Bank of Poland (NBP) for the European Bank for Reconstruction and Development (EBRD) has had little effect on the zloty as many have predicted.
Analysts said the lack of market reaction sent a signal that the days when the nation's confidence in its market economy know-how rested on a few individuals are over.
Earlier this year, former Finance Minister Leszek Balcerowicz, author of the economic shock therapy of the early 1990s, played on remnants of those fears when he threatened to resign. When he was replaced during the Solidarity Election Action (AWS)/Freedom Union (UW) shake-up in May, however, the markets hardly noticed.
Poland has grown out of its infant stages of development since 1989; Gronkiewicz-Waltz recently referred to its economy as a "mature child." But with a current account deficit that occupies more than 7% of gross domestic product, inflation hovering around 10%, the highest interest rates in the region at 19-23% and talk of an economic crisis, Poland can't afford to make mistakes with its monetary policy.
While Gronkiewicz-Waltz once made decisions concerning the relaxing or tightening of interest rates her own, since 1998 the Monetary Policy Council (RPP), which is chaired by the NBP president, has assumed responsibility for the task.
It's from that rate-setting body that her replacement could be found, according to President Aleksander Kwasniewski, whose appointment of an NBP chief must be approved by the Sejm. Kwasniewski named RPP members Boguslaw Grabowski and Dariusz Rosati, along with Balcerowicz and his own economic adviser Marek Belka, among the seven or eight candidates he's considering.
The names of two other RPP members, Grzegorz Wojtowicz and Cezary Jozefiak, as well as the NBP's two deputy presidents, Jerzy Stopyra and Ryszard Kokoszczynski, have been circulating as candidates for the NBP's top post. One additional name, that of former finance minister and current Democratic Left Alliance (SLD) deputy Jerzy Osiatynski, is also making the rounds.
Kwasniewski will probably reveal his choice within the next couple of weeks, but analysts consider the main contenders to be Rosati and Belka.
"I think the president will choose an economist linked with the left side of the political scene," said Jacek Wisniewski, Amerbank's head of research.
While Rosati isn't directly affiliated with the SLD, a point in his favor as far as approval from the UW and AWS is concerned, "he's connected with the left," Wisniewski said. Another of Rosati's selling points is that he's internationally known and respected, he said.
A professor of economics who has studied and taught around the world, Rosati was Poland's foreign affairs minister from 1995 to 1997. Witold Chusc, a macro analyst with CDM Pekao Securities, said Belka, the finance minister in the previous leftist Cabinet, also has a good chance of getting the job. But Rosati might be more acceptable to the right side of Parliament, he said. "He's thought of as a man of the middle, perhaps left-middle, but middle," Chusc said.
Adam Murza-Murzicz, an independent financial adviser and former investment banker, describes Rosati as a "calm, steady hand" and a "natural talent." Belka is out of the running for central bank governor, he said, only because he'll be the next finance minister when the SLD likely wins the next parliamentary elections.
Other analysts agree Belka is not likely to be appointed, although Chusc thinks Marek Borowski, deputy speaker of the Sejm, is just as likely to be the next finance minister.
But whoever gets the job, consensus has it that Gronkiewicz-Waltz's successor will have it easier thanks to her victories. "I believe it's very clear that what she did was bring order to the Polish banking sector," said Adam Borusowski, president of Kouri Capital and a capital markets expert with the Adam Smith Research Centre.
When the little-known Warsaw University teacher of law first became NBP president in 1992, she faced a 44% inflation rate, meager hard currency reserves, a flimsy, corrupt banking system and a sinking zloty. On top of those economic woes, many doubted an academic with limited financial experience was the right person for the job.
Through conservative safety measures and the development of a strong supervisory arm within the NBP, however, Gronkiewicz-Waltz brought security to Poland's banking sector. "She may not have known everything about central banking," Murza-Murzicz said. But "she did a brilliant job. Nobody expected her to do a brilliant job."
Although most analysts said Gronkiewicz-Waltz, who's not yet halfway through her second term, should finish her term as president, Murza-Murzicz said "the departure of Gronkiewicz-Waltz doesn't make any difference one way or the other. All the indications are that we are heading toward a currency crisis."
Gronkiewicz-Waltz will assume her new position in London in January as vice president of the EBRD. She'll replace Miklos Nemeth, the former prime minister of Hungary, who left in April.
