The Review
Economy
The Monetary Policy Council (RPP) raised interest rates by 25 basis points to 6% last Wednesday. The decision follows on the heels of a 0.5% rise at the RPP's previous meeting in June. Leszek Balcerowicz, the National Bank of Poland's (NBP) president, had said publicly that the council was "determined to take decisive action to bring inflation back to less than 2%." Despite this, many analysts had predicted that further interest rate increases would only happen in August, or even September. The rise of inflationary expectations to 4% last month led the RPP to bring the rate hike forward. Balcerowicz said the council concluded that inflation would persist even after the temporary effects of EU accession had faded. The decision met with mixed reactions, as some economists expected the rise to strengthen the currency, thus hurting exporters. Most analysts said, however, that investment and the economy as a whole will likely continue growing at a healthy pace.
The Supreme Auditing Chamber (NIK) has released a report criticizing the privatization of 13 medium-size companies between 2001-2003. The NIK says the companies were sold at prices below their true value, as well as pointing out other irregularities, including unclear privatization goals, accepting dubious investors and a lack of effective control over the process by the Treasury. The valuation of the privatized companies was based on wrong assumptions, which led to an estimated price zł.55 million below their real value. The inadequate control over the privatization exercised by the Treasury allowed investors to withdraw around zł.272 million from the companies. The NIK has informed the Justice Ministry, the Internal Security Agency (ABW) and the Central Bureau of Investigation (CBŚ) about the irregularities and investigations are on the way.
Last Friday the EU Commissioner for Regional Development, Jacques Barrot, transferred the first zł.1.05 billion (€240 million) from the EU's structural funds for Poland. In a few weeks time, these funds will be used to build highways, sewage treatment plants, and modern dairy and meat processing plants. This year, Poland will receive four times more money for development as in 2003, and by the end of 2006 will be able to make use of zł.72 billion. The first group to benefit will be fishermen and later farmers. Towns are next in the queue, waiting for funds to build sewage treatment systems. But roads are the EU's priority, with Barrot declaring, "These will be the measure of our success." As a result, almost half of the zł.21.5 billion (€4.9 billion) worth of Coherence Fund between 2004-2006 will be spent on Polish highways.
International
A Polish soldier was killed in Iraq last Thursday. Corporal Marcin Rutkowski was the seventh Polish soldier to die there since the beginning of the conflict, when the four-car convoy he was in was ambushed. Another eight soldiers were injured. The routine convoy was attacked with 16 different types of explosives buried by the side of the road and detonated by a wire. Although the bomb was homemade, General Adrzej Ekiert, Commander of the Polish forces in Iraq, said that the attack was well planned and that it will be avenged. Corporal Rutkowski was 24 years old and had gone to Iraq as a volunteer. He was married and had a three-year old son. The other soldiers' injuries are not said to be life-threatening.
Domestic
A distinguished Catholic priest in Gdańsk has been accused of child abuse, prosecutors revealed. Henryk J. is a well-known nationalistic firebrand and has been a leader of the extreme right since the early 1990s, although in the previous decade, Father J. was a leading light for the Solidarity movement. The prosecutors said the investigation is "into the matter," rather than "against an individual."
At its last session before the summer hiatus, the parliament passed the healthcare act to replace the previous law that the Constitutional Tribunal ruled to be in breach of the constitution. Health Minister Marek Balicki hailed the new law as promising to diverge a potential constitutional crisis. The law is aimed at helping to rein in spending and avoid exacerbating budget deficits. This marks the first significant piece of legislation passed under the new government.
The Monetary Policy Council (RPP) raised interest rates by 25 basis points to 6% last Wednesday. The decision follows on the heels of a 0.5% rise at the RPP's previous meeting in June. Leszek Balcerowicz, the National Bank of Poland's (NBP) president, had said publicly that the council was "determined to take decisive action to bring inflation back to less than 2%." Despite this, many analysts had predicted that further interest rate increases would only happen in August, or even September. The rise of inflationary expectations to 4% last month led the RPP to bring the rate hike forward. Balcerowicz said the council concluded that inflation would persist even after the temporary effects of EU accession had faded. The decision met with mixed reactions, as some economists expected the rise to strengthen the currency, thus hurting exporters. Most analysts said, however, that investment and the economy as a whole will likely continue growing at a healthy pace.
The Supreme Auditing Chamber (NIK) has released a report criticizing the privatization of 13 medium-size companies between 2001-2003. The NIK says the companies were sold at prices below their true value, as well as pointing out other irregularities, including unclear privatization goals, accepting dubious investors and a lack of effective control over the process by the Treasury. The valuation of the privatized companies was based on wrong assumptions, which led to an estimated price zł.55 million below their real value. The inadequate control over the privatization exercised by the Treasury allowed investors to withdraw around zł.272 million from the companies. The NIK has informed the Justice Ministry, the Internal Security Agency (ABW) and the Central Bureau of Investigation (CBŚ) about the irregularities and investigations are on the way.
Last Friday the EU Commissioner for Regional Development, Jacques Barrot, transferred the first zł.1.05 billion (€240 million) from the EU's structural funds for Poland. In a few weeks time, these funds will be used to build highways, sewage treatment plants, and modern dairy and meat processing plants. This year, Poland will receive four times more money for development as in 2003, and by the end of 2006 will be able to make use of zł.72 billion. The first group to benefit will be fishermen and later farmers. Towns are next in the queue, waiting for funds to build sewage treatment systems. But roads are the EU's priority, with Barrot declaring, "These will be the measure of our success." As a result, almost half of the zł.21.5 billion (€4.9 billion) worth of Coherence Fund between 2004-2006 will be spent on Polish highways.
International
A Polish soldier was killed in Iraq last Thursday. Corporal Marcin Rutkowski was the seventh Polish soldier to die there since the beginning of the conflict, when the four-car convoy he was in was ambushed. Another eight soldiers were injured. The routine convoy was attacked with 16 different types of explosives buried by the side of the road and detonated by a wire. Although the bomb was homemade, General Adrzej Ekiert, Commander of the Polish forces in Iraq, said that the attack was well planned and that it will be avenged. Corporal Rutkowski was 24 years old and had gone to Iraq as a volunteer. He was married and had a three-year old son. The other soldiers' injuries are not said to be life-threatening.
Domestic
A distinguished Catholic priest in Gdańsk has been accused of child abuse, prosecutors revealed. Henryk J. is a well-known nationalistic firebrand and has been a leader of the extreme right since the early 1990s, although in the previous decade, Father J. was a leading light for the Solidarity movement. The prosecutors said the investigation is "into the matter," rather than "against an individual."
At its last session before the summer hiatus, the parliament passed the healthcare act to replace the previous law that the Constitutional Tribunal ruled to be in breach of the constitution. Health Minister Marek Balicki hailed the new law as promising to diverge a potential constitutional crisis. The law is aimed at helping to rein in spending and avoid exacerbating budget deficits. This marks the first significant piece of legislation passed under the new government.
