Poland launches economic package to counter virus effect

2020-03-18 15:02 update: 2020-03-21, 10:27
Polish PM Mateusz Morawiecki. Photo PAP/Wojciech Olkuśnik
Polish PM Mateusz Morawiecki. Photo PAP/Wojciech Olkuśnik
Poland will launch a PLN 212 bln (EUR 47.31 bln) package of measures protecting businesses and employees against the adverse economic effects of the spreading coronavirus epidemic, the president and the prime minister announced after a top meeting on Wednesday.

President Andrzej Duda on Wednesday morning chaired the Cabinet Council, a consultative body comprising the president and the government.

The anti-crisis package is divided into five equal parts and its estimated total value is PLN 212 bln (EUR 47.31 bln), the prime minister said, adding that the money is independent from EU funds.

The legislation should be ready by the end of the week, the president added.

The president said Poland would not avoid budget deficit this year, contrary to previous government plans of zero deficit in 2020.

The current crisis may hit the Polish economy harder than the financial crisis of 2008, the prime minister warned.

"Due to the coronavirus epidemic, the economy is bound to be hit very hard, it will be hit at least as hard as a dozen or so years ago, and there are already forecasts showing that this impact will be even stronger," Morawiecki said.

On the employee side, the package will include wage payment for those who cannot work for various reasons, the president said after the Cabinet Council meeting. Businesses will benefit from delayed social insurance payments, which they will also be allowed to pay in instalments.

Poland's state-owned development bank BGK will increase guarantees for companies to 80 percent of loan value while the National Bank of Poland and the Polish Financial Supervision Authority will undertake measures to protect the Polish banking system, Duda also said.

Under certain conditions, the government will help employers cover 40 percent of their employee wages, up to the average wage level, Morawiecki said, adding that the employer will have to match the amount.

People employed on commission and specific-task contracts as well as self-employed people would be able to get up to 80 percent of Poland's minimum wage, the prime minister said. The current minimum wage level is PLN 2,600 (EUR 577), before tax and social insurance contribution.

Companies will also be offered loan guarantees, liquidity support and micro loans of up to PLN 5,000 (EUR 1,110), Morawiecki also announced.

The government will set up an investment fund worth at least PLN 30 bln (EUR 6.66 bln), independent from EU funds, according to Morawiecki. The money will be used for public investments, including local roads, digitisation, modernisation of schools and energy transition.

The package will also boost healthcare investment, the president said.

The government will earmark PLN 7.5 bln (EUR 1.67 bln) for healthcare support, the organisation of infectious disease hospitals and medical equipment, the prime minister added.

The package also includes anti-usury solutions to fight with unreasonable price increases amid the pandemic, Morawiecki announced.

The government intends to temporarily reinstate Sunday trading that has been virtually phased out over the past years.

Additionally, work permits for foreigners will be extended to help Polish companies fight staff shortages.

According to a related government document that sums up the costs of the solutions, the PLN 212 bln package includes a PLN 66 bln (EUR 14.66 bln) cash component, a PLN 74.5 bln (EUR 16.56 bln) government liquidity component and a PLN 70 bln (EUR 15.56 bln) central bank liquidity component.

The Safety of Workers, the first element of the package, is worth PLN 30 bln, including PLN 23.8 bln (EUR 5.29 bln) in spending and PLN 6.2 bln (EUR 1.38 bln) in liquidity funds.

Financing Companies, the second element, is to cost PLN 73.2 bln (EUR 16.27 bln), including PLN 4.9 bln (EUR 1.09 bln) in spending and PLN 68.3 bln (EUR 15.18) in liquidity funds.

Healthcare investments will be worth PLN 7.5 bln (EUR 1.67 bln), while the support for the financial system will require PLN 70.3 bln (EUR 15.61 bln).

Public investments, the fifth and final element, will cost Poland PLN 30 bln.

Earlier on Wednesday, PM Mateusz Morawiecki announced on Facebook that the official name of the package will be "The Economic and Social Anti-Crisis Shield for the Security of Companies and Employees in the Face of the Sars CoV-2 Virus Pandemic." (PAP)