Polish Cabinet Reshuffle Boosts Premier Months Before Election

(Bloomberg) -- Poland’s prime minister shuffled his cabinet following a landslide victory in European elections, shouldering more responsibility as he eyes another triumph in this fall’s parliamentary vote.

The changes highlight Mateusz Morawiecki’s metamorphosis from a banking executive with next to no political experience just four years ago to one of Poland’s main decision makers, second only to ruling-party boss Jaroslaw Kaczynski.

The premier replaced Finance Minister Teresa Czerwinska, with whom he clashed over election-year fiscal stimulus, with one of her deputies and current tax-office boss Marian Banas. Several of his potential rivals, including his predecssor Beata Szydlo and Interior Minister Joachim Brudzinski, quit the cabinet after winning seats in the European Parliament.

“Morawiecki’s position is surely strengthening, with a number of experienced cabinet members moving to the European Parliament, where they’ll focus more on international affairs,” said Wawrzyniec Konarski, a political scientist at Vistula University in Warsaw. “On the flip side, this means the premier is now even more responsible, especially in the critical pre-election period.”

Budget Focus

Czerwinska, an academic handpicked by Morawiecki 17 months ago, argued with her boss over an $11 billion package of welfare spending and tax cuts that she feared could dangerously widen the budget deficit. She will join the central bank’s management board, PAP news agency reported on Tuesday.

Her replacement is one of the faces of Poland’s successful crackdown on tax loopholes in past years, which has boosted revenue and helped fund the government’s record-high welfare programs. The change at the helm of the finance portfolio caused no jitters on markets, with benchmark Polish yields near 3-year lows on Tuesday.

“The shape of the 2020 budget will be key for the new minister,” said Jaroslaw Janecki, chief economist at Societe Generale SA in Warsaw. “Certainly before elections there will be new programs” in terms of tax policies, which will affect next year’s budget, he said.

The ruling nationalists defeated a liberal coalition in the European Parliament ballot, helped by strong economic growth that outweighed concerns over repeated clashes with Brussels over democratic standards. After winning a record 45% of votes, Law & Justice remains in the driver’s seat to win the general election, which is due by November.

A day after the vote, Kaczynski publicly thanked Morawiecki for his “tireless campaigning.” Czerwinska’s ouster also clears the path for the prime minister to potentially order another increase in welfare spending, if the ruling party’s popularity sags before the ballot.

--With assistance from Adrian Krajewski.

To contact the reporters on this story: Dorota Bartyzel in Warsaw at dbartyzel@bloomberg.net;Marek Strzelecki in Warsaw at mstrzelecki1@bloomberg.net

To contact the editors responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net;Andrea Dudik at adudik@bloomberg.net

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