Voting bloc could override presidential veto of RPP law

An anti-Monetary Policy Council (RPP) voting bloc could ensure that legislation targeting the council's independence becomes law despite a potential presidential veto, an opposition politician said last week. The central bank's RPP last week decided not to cut interest rates, prompting a new round of saber rattling from government circles. "This is just further pretext for manipulation of the National Bank of Poland's (NBP) independence," said Zyta Gilowska, an MP with the Civic Platform (PO) and a vice chairman of the Sejm's public finance committee. Through a voting bloc led by the ruling Democratic Left Alliance (SLD), the Polish Peasants Party (PSL), Law and Justice (PiS), the League of Polish Families (LPR) and Self-Defense (SO), Gilowska said those pushing to effectively limit the independence of the rate-setting body have the necessary votes to override a veto from President Aleksander Kwaśniewski. Such a scenario would require a three-fourths majority vote of the 460-member Sejm, the lower house of Parliament. "Even if the bill passes the Sejm, I cannot foresee major changes in interest rate policy," Gilowska said.

Kwaśniewski has spoken against constitutional measures targeting the NBP, threatening his veto. Proposals backed by PSL seek to add members appointed by Parliament to the 10-person RPP; tipping it in favor of more aggressive rate cuts. The measure would also charge the RPP with job creation and spurring economic growth. Gilowska added that the president would surely be keen to avoid a fight with his own party. "I'm not so sure he's completely against it," Gilowska added. SLD's leadership, while stopping short of an outright endorsement of the proposal, raised its anti-RPP rhetoric to new levels last week after the body kept the NBP's main rate at 10%. NBP President Leszek Balcerowicz, while acknowledging signs of economic recovery, told a press conference afterward that caution is needed due to weaker inflationary pressures, adding that time is needed to evaluate the effects of its easing during the last year, which saw cuts of 900 basis points. The move was widely expected by local economists, which see room for further cuts, though they also cite the last easing period in 1999 when deep rate reductions weakened the złoty and helped kick up inflation.

The SLD argues further rate reductions would help pull the nation out of its worst slowdown in 10 years, as unemployment creeps toward 20%. "The arguments of the RPP are always the same ... wait, discuss and analyze," said Michał Tober, spokesman for Prime Minister Leszek Miller's government. Tober said the cabinet would review the decision's implications for the economy, but refused comment on SLD's position on the RPP legislation, which officials say will be debated in Parliament no later than mid-June. The cabinet will talk about it sooner.

"The issue will be discussed Tuesday," Tober said. Still, Tober rejected claims that Miller's government seeks to curb the NBP's independence. PSL's legislation has drawn rebukes from the International Monetary Fund (IMF) and the European Union (EU). Tober dismissed these concerns as the product of "propaganda from some people in the central bank." "Saying we don't accept the policies of the RPP isn't a threat to independence," the government's spokesman added. "They are not (infallible), like the Pope."