Poland’s First Budget-Surplus Plan Threatened Amid Party Spat

(Bloomberg) -- Poland’s plan for its first post-communist balanced budget came under threat after factions of the ruling party quarreled over their intentions to juice the economy with post-election stimulus.

The more business-oriented camp in the Law & Justice party, led by Deputy Prime Minister Jaroslaw Gowin, voiced opposition to the planned hikes in pension contributions as well as making good on an election pledge to boost minimum wage.

That came after other party members said their smaller-than-expected Oct. 13 win was partially caused by unrealistic economic pledges. The promises, along with tirades against the LGBTQ community and the European Union’s liberal values, were at the foundation of the party’s election campaign.

Before the election, the government pushed through a minimum-wage hike for next year and pledged to almost double salaries for the lowest earners by 2024.

“I strongly oppose a boost in minimum wage,” Entrepreneurship Minister Jadwiga Emilewicz told the TVN24 broadcaster on Tuesday.

Her stance comes after Gowin said a balanced budget wasn’t a do-or-die goal and that he won’t back hiking social security contributions for high earners. President Andrzej Duda, who is seeking re-election next year, also rejected the higher pension costs.

That measure would boost the state social-security system by 5.1 billion zloty ($1.3 billion) in 2020 and help the government reach its pledge to end the year with Poland’s first-ever balanced budget. It would also saddle higher earners and their employers with additional levies.

“This means that next year’s deficit may turn from the planned zero to around 15-20 billion zloty,” Santander Bank Polska’s Warsaw-based economist Piotr Bielski said by phone. “This would not be any great scare for investors.“

©2019 Bloomberg L.P.

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