Balcerowicz To Head Poland Bank

By Andrzej Stylinski, Associated Press, Friday 22 December 2000, 3:19 pm Eastern Time

WARSAW, Poland (AP)—The economic guru whose “shock therapy” reforms successfully jolted Poland from communism to capitalism in the early 1990s won approval Friday to lead the country's central bank as Warsaw prepares to join the European Union.

The Sejm, parliament's lower house, voted 226–214 to make Leszek Balcerowicz the new president of the National Bank of Poland.

The financial markets and foreign investors applauded the confirmation of the tough-talking former finance minister who they view as the guardian of Poland's hard-won market reforms.

“He is highly esteemed among foreign investors, and his approval as central bank president will be received with relief,” said Mateusz Szczurek, a market analyst at ING Barings in Warsaw.

Within minutes of the Sejm's vote, Poland's currency, the zloty, strengthened to 4.17 to the U.S. dollar, from 4.21.

Balcerowicz, 53, will start his new job Jan. 1, succeeding Hanna Gronkiewicz-Waltz, who is becoming a vice president at the European Bank for Reconstruction and Development.

Balcerowicz resigned as head of the Freedom Party this month, calling it a conscious decision to leave politics and seek the central bank post.

“I will take care of the stability of the zloty and a sound banking system,” the PAP news agency quoted him as saying after Friday's vote.

It is another pivotal step in a career that has given Balcerowicz a reputation in Poland perhaps second only to Lech Walesa, founder of the Solidarity movement that toppled communist rule in 1989.

Balcerowicz served as finance minister in 1989-90 in Poland's first post-communist government, and again from 1997 until last June.

His so-called shock therapy put the economy on track for annual growth of 4 percent to 6 percent and helped Poland attract $43 billion of direct foreign investment.

The reforms brought cuts in state subsidies, an end to most price controls and a sale of bloated state industries. Goods returned to empty shop shelves overnight, hyperinflation cooled and Western governments forgave half of Poland's $33 billion foreign debt.

Balcerowicz nonetheless remains unpopular among many workers and ex-communist politicians who blame him for layoffs and other painful side effects of the reforms. Unemployment, which now tops 14 percent, remains one of the clouds over the economy.

When confronted with such criticism, he usually replies that things would have been much worse without radical reforms to wipe away the legacy of communism.

Balcerowicz also is reviled by a far-right bloc in Solidarity that has fought his strident fiscal austerity. Things got so nasty last June that Balcerowicz quit as finance minister and pulled thel Freedom Union out of the governing coalition.

Economists say they expect no big changes in monetary policy, which is decided by the central bank's 10-member Monetary Policy Council. As head of the bank, Balcerowicz will have a decisive voice.

“Leszek Balcerowicz is probably the best candidate to handle a euro-friendly monetary policy. He wants to maintain a strong zloty, and that's what the (European Central Bank) is going to want to hear,” said Thomas Brown, an analyst with JP Morgan in London.

“Obviously, with so much foreign involvement in the Polish market, a recognized and a heavyweight name like Balcerowicz is very important,” he said.

“He is a personal guarantee of central bank independence,” said Miroslaw Gronicki, chief economist at BIG Bank Gdanski in Warsaw. “His tough and unyielding character should provide a sense of security.”