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Central banker decries Polish pension fund theft

A second Polish central bank policymaker came out against the government`s plan to reform the state pension system on Monday, saying that it brought too many negative side effects in trying to deal with the current system`s flaws.

The plan, which allows ministers to take over and cancel 121 billion zlotys in government bonds held by state-guaranteed private pension funds, has drawn protests from some bankers and fund managers.

 

It is expected to be passed by parliament but growing domestic criticism could yet influence President Bronislaw Komorowski, who also needs to approve it.

 

Winiecki said that with private funds portfolios reduced to only equities, they would be exposed to large swings, which is likely to be used by the government as a pretext to curb the funds further in the future.

 

- The government (...) is conducting a policy of undermining trust in markets, and this is what I resent most, Winiecki told Polsat News broadcaster. - These solutions now are underhand and temporary, Winiecki told Polsat News broadcaster.

 

Former prime minister Jerzy Buzek, a prominent figure in the ruling Civic Platform party, as well as another central banker Jerzy Hausner have said the government move was harmful for the economy and makeshift.

 

The government has defended the measure, saying it will give pensioners a better deal and, crucially, substantially reduce public debt.

 

Another central bank rate-setter, Anna Zielinska-Glebocka has said the pension reform would give the economy a vital investment boost.

 

The SLD opposition party has said it would vote for the reform when it comes before parliament, ensuring it passed even if the government cannot muster a majority on its own.

 

But Komorowski, a political ally of Prime Minister Donald Tusk, has said he would ask experts and lawyers to thoroughly analyse the draft legislation to check if it does not violate the constitution.

 

Komorowski needs to approve any new legislation before it comes into law and has the option of sending it to the constitutional tribunal, a move which would likely slow the legislative process.

 

The government expects the changes to the pension system, which would reduce the fiscal deficit by about 0.5 percent of gross domestic product and public debt by about 8 percent of GDP, to be implemented by mid-2014.

 

The pension move has already tarnished the reputation of Poland among some foreign investors, weighing on its image as the most business-friendly big emerging economy in Europe.

Source: Reuters

2013-09-18



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