Tragic deaths of Polish President Lech Kaczynski, and 95 others, including many top defence officials and public figures are unlikely to have big market consequences for Poland, according to economists.
The president's jet crashed in the outskirts of Smolensk on Saturday morning enroute to a war memorial service in Russia. Among the other Polish senior officials killed in the crash were the president's wife Maria, central bank governor Slawomir Skrzypek, 15 members of the lower house of the parliament, including two deputy house speakers, three senators, and four senior heads of the Polish army.
Danske Bank analyst Lars Christensen does not think the tragedy will have a big negative impact on the Polish economy, despite the high degree of political uncertainty. On the contrary, the analyst said the tragic events might pull the nation together, reducing political risks.
"From a market perspective, we think it will be most important who will be appointed as new central bank governor," Christensen wrote in a note today. Deputy governor Piotr Wiesiolek has temporarily replaced the late Skrzypek at the helm of the National Bank of Poland.
"The NBP remains in neutral bias, economic environment was preventing from even considering rate changes in the next 3-6 months," Mateusz Szczurek, who is ING Bank NV's chief economist in Poland, said. "Death of the monetary policy council chief is most unlikely to shift the rate outlook in the near term."
"We doubt the immediate PLN and bond market impact would be significant, as short-term economic policy implications are limited," the ING Bank economist added.
The death of the president, who's veto power was quoted as an obstacle to fiscal reforms, might speed up the implementation of a hike in the retirement age, taxing farmers, removing retirement priveleges to uniformed services, and other such measures, Szczurek noted.
"Perhaps the most highly-profiled significance of the tragic loss of the governor is the highly publicized conflict between the Monetary Policy Committee and the NBP board about forex risk provisioning and the 2009 dividend payout for the government," said Szczurek. "The most likely outcome remains some sort of a compromise payout of more than PLN 4 billion and less than PLN 8 billion." The final version of the 2009 financial statement must be passed by April 30.
Parliamentary Speaker Bronislaw Komorowski, who has taken over all the duties of the deceased president, will likely take his time before choosing a permament successor to Skrzypek, the economist said, fearing accusations of a power grab. The ruling Civic Platform-affiliated Komorowski has said he would call for early elections within 14 days, in line with the constitution. The vote must be held within another 60 days.
"Longer term, likely [the ruling] PO's president and parliamentary majority means there will be less opposition to reform implementation, but it also brings risks to central bank independence," Szczurek said.
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