Event

The run-off of the presidential race which took place last 24 May unexpectedly brought to power the opposition conservative and nationalist Law and Justice (PiS) party-backed candidate, Andrzej Duda. The latter defeated incumbent Bronisław Komorowski, who was supported by the centre-right ruling Civic platform (PO) and had served five years as president. It seems that the corruption scandals that have tarnished the image of his party and uneven perceived gains of growth have got the better of the incumbent, in spite of the robust growth period corresponding to his mandate and political stability sentiment.

Impact on country risk

The shift to the right of the presidential mandate will have several implications on the domestic side and the foreign policy–making process. The most immediate consequence is that it signals a possible change of majority in view of the next October parliamentary election. An alignment of the executive with the presidential line would make it easier to implement Duda’s electoral programme. This one includes protectionist policies such as new taxes on foreign-owned banks and supermarkets and the willingness to put the banking sector under Polish control again. Other ’Hungarian-style’ policies such as a conversion of Swiss franc-denominated households’ loans at a historical rate, which is detrimental to the banking sector, have also been mentioned. Besides, Duda has announced his will to reverse the increase of the retirement age voted by the PO government, potentially damaging the ongoing fiscal consolidation effort. On the external side, nationalist and Eurosceptic views should cause the country to distance itself from EU institutions, although its high reliance on EU funds makes very strong clashes unlikely. At the same time, the new President could instil a still more adverse line towards Russia, PiS being a strong detractor of relations with that country since the airplane crash that killed Kaczynski in 2010.

Analyst: Florence Thiéry, f.thiery@credendogroup.com