– Inflation that we see in Poland is the result of a series of events that are not influenced by the government or the National Bank of Poland – says Minister of Finance Tadeusz Kościński in an interview with Interia.
– You have to look at why we have inflation in Poland, you cannot say who is to blame for this. Last year there was a pandemic and recession, not only in Poland, practically all over the world. Then, abruptly, most economies opened up very quickly resulting in very high demand and supply lagging behind demand. In addition, energy prices have risen, and Gazprom is not helping either, as it turned the tap on to increase the price of gas. The policy of the European Commission, which follows the Green Deal, is also not helping and the prices of emission allowances have soared. Inflation has risen and neither the NBP nor the government has any influence on it. When fuel and energy go up, everything goes up, so we have consequences in Poland in the form of more expensive food and services – adds the Minister of Finance.
In November, inflation was at the highest level in 21 years and increased to 7.7%. from 6.8 percent in October.
In October, the MPC raised the main NBP rate from 0.1 to 0.5%, and then in November from 0.5%. up to 1.25 percent
– You can always discuss whether something can be done sooner or more (increase interest rates – ed.). But I wouldn’t be so brave if there was something more to be done or if there was something to be done earlier. You have to remember that we are only 10 months after the recession and you can easily reverse (the economy – ed.). As if the NBP activated the handbrake too early in the form of an increase in interest rates, when inflation came from the outside during the first wave, it could very easily push us into recession or stagnation Kościński said.
– Only now will these tools work in the form of higher interest rates, which will slightly slow down the demand for loans. Hopefully this will cool down inflation, we expect it to peak in January, February – added the Minister of Finance.
When asked if the interest rate increases were at the right time, he replied:
– History will show us, we’ll see in a year or two. Applying the brake too early may be counterproductive. (…) I think that the NBP did well, they certainly could not do much much earlier. Could they have done more? It’s hard to say.
Before the announcement of the government’s implementation of the anti-inflationary shield, economists expected the inflation peak in the first quarter of 2022 and the CPI inflation index to reach 8-9%. Currently, they indicate that the result from this range can be seen in December this year and it will be the highest point of inflation in the current cycle.
– With inflation, the emotional aspect is very important. If we think inflation will grow fast, we will all “jump on this car” and demand higher wages and the spiral (prices and wages – ed.) Will lose control. I know inflation is going up a little faster than we all would like, but I hope it is under control, that this peak will be in January, February and we will be going down, not that we will lose control of it. A lot depends on emotions and commentators – Tadeusz Kościński assesses.
When asked if, in his opinion, Poles are used to stable prices, the Minister of Finance will not increase their inflation expectations and will not assume that the increased inflation will stay for a long time, he replies:
– We are doing what we can on our part, there is an anti-inflation shield. But let’s also remember that this is money that will enter the market and it also has an inflationary aspect. We have to be very careful. We have two goals: the first to hold back price increases for 4-5 months to get through this wave, and the second to help the poorer. I hope that both aspects will not make inflation even significant, because we all know that if there is more cash in the market, it will definitely be inflationary. But I hope it will not be significant – says the Minister of Finance.
– Inflation will not go away. It is not that in June 2022 we will have inflation of 1 or 2 percent, you have to be realistic. The point is for this price increase to stop and for inflation to go down, but “overnight” we will not go down from 7-8 percent. to 1-2%, only this will take some time. The point is that there should be a downward trend, adds Tadeusz Kościński.
The Minister of Finance believes that public finances are in very good condition.
– At the end of October, we had over PLN 150 billion in current accounts, we had almost PLN 52 billion in budget surplus. (…) We can prepare appropriate financial pillows for next year. None of us know what the next year will be, so far there is an economic boom, but as we saw in the last year, this may change very quickly, for various reasons, not only because we will have to potentially have a local lockdown in Poland, but our suppliers whether sales markets are also very sharply going through this wave and we do not know what it means for our exporters – says Tadeusz Kościński.
When asked why look for PLN 3-4 billion in savings in administration, which was announced by the Prime Minister, since there is such a surplus in the central budget, he says:
– I wouldn’t connect it. The prime minister said that we would not spend more, but rather conveyed that we would not hire new people, but that if someone leaves, someone will come to this place. We will not create new funds, because the creation of new funds and their use is inflationary, because this is new money on the market and fuel is being added to this fire (then – ed.). This is a signal rather than that we will walk with a magnifying glass and cut costs.
Kościński stresses that the surplus will be used to “create adequate reserves to have sufficient own resources, when the pandemic is under control and inflation is under control, to start the economy, not through consumption but investment”.
Reserves that “This is not the time for fiscal consolidation” although he realizes that “The European Commission will be back on the track of convergence and we will have to watch out for our spending”.
When asked about it if and when, in his opinion, the National Reconstruction Plan can be unblocked by Brussels states:
– It should have been unlocked five months ago. This is unfortunately a “political potato”. We have no influence on it, neither the ministry of funds nor finance, because politicians in Brussels have taken over this topic and I hope that it will resolve quickly and that the money will be released, and projects (with KPO – ed.) Will be there, because it is good for Poland and the European Union.
– The Commission should separate these two topics: one is KPO, and completely different are political talks – emphasizes Tadeusz Kościński.
The Minister of Finance is “very optimistic” about the economic outlook for 2022.
– You can see that Polish entrepreneurs have dealt with the pandemic and recession, they are doing well this year. I hope that the concessions we offer (as part of the Polish Order – ed.), E.g. the free amount – will make some of those who are not profitable today enter the official market – sums up Tadeusz Kościński.
Paweł Czuryło spoke