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Polish Prime Minister Under Fire Over Purchase Of Inflation-Linked Bonds

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Poland’s prime minister Mateusz Morawiecki is facing scrutiny over his purchase of Polish treasury bonds worth 4.6 million zlotys (over $1 million), half of which were inflation-linked.

Civil society campaigners and opposition lawmakers demanded that Morawiecki, an economist and former bank chairman, explain whether he knew that the inflation rate would increase when he made the investment in December 2021.

Prices in Poland have been increasing sharply in the past year. In May, CPI growth accelerated to 13.9% year on year and 1.7% month on month, driven mainly by growing food and energy prices.

The government’s spokesperson claimed that Morawiecki “didn’t know much more than the general public” about the prospect of inflation going up in the following months.

“Misleading inflation forecasts”

Last November, Jacek Sasin, Poland’s deputy prime minister who also serves as minister for state assets, estimated that inflation would drop significantly at the beginning of 2022 as a result of the government’s “anti-inflation shield.”

The package, worth 10 billion zlotys ($2.4 billion), provided income-dependent cash payment to households, cut VAT on gas to 8% from 23% and lowered taxes on petrol to the minimum allowed by the European Union.

Earlier in the year, Adam Glapiński, chairman of the central bank, reassured borrowers that the “likelihood of raising interest rates is zero” and insisted over months that inflation would not pose a challenge.

By late 2021, inflation had already reached the highest level in over two decades and many economists warned that the government’s policies, including the “anti-inflation shield” and the “Polish Deal” stimulus program, would further drive up prices. According to a survey by a state statistics agency carried out in November, 45% of consumers in Poland expected inflation to remain high.

On Tuesday, speaking to a journalist on a YouTube show, Morawiecki alleged that he had “no way of knowing” that inflation would increase when he made the investment.

Half of Morawiecki’s bonds are linked to the Warsaw Interbank Offer Rate. The other half provide a fixed interest rate of 1.3% in the first year and an inflation-indexed one for the remaining three years.

Donald Tusk, leader of the opposition Civic Platform and former President of the European Council, said that “while Jacek Sasin was misleading the public opinion promising a low inflation rate in 2022, prime minister Morawiecki spent 4.6 million zlotys on the bonds, finding an effective way not only not to lose his money, but also to profit from the soaring prices.”

Bogusław Grabowski, former member of Poland’s Monetary Policy Council, said in an interview with the Gazeta Wyborcza daily that Morawiecki, as one of the creators of the country’s macroeconomic policies, must have been aware of the forecasts and used that knowledge to his advantage in a “extremely unethical” way.

Alleged discrepancies in the annual asset declaration

Opposition lawmakers have also asked the Central Anticorruption Bureau (CBA) to investigate Morawiecki’s asset declaration for 2021. They allege that the politician failed to report the sale of Santander Bank shares listed in his 2020 declaration. Morawiecki was the chairman of Bank Zachodni WBK, which was later acquired by Santander Group, till 2015 when he was appointed deputy prime minister.

During a press conference, Morawiecki said he cashed out the shares and donated the funds to a charity.

Tomasz Trela, one of the lawmakers who announced the complaint to the CBA, urged the prime minister to come clean on his finances and reveal which charity he donated to.

According to the Government Information Center, the shares were worth 295,000 zlotys (nearly $66,000).

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