According to Finance Minister Andrzej Domański, which he revealed in his interview for Bloomberg, the actions of the previous government led to a situation in which minority shareholders on the Warsaw Stock Exchange were “sidelined”. As he claims, since 2017, this has resulted in a systematic outflow of companies from the exchange. There have also been few initial (or rather “primary”) public offerings, and many companies have been delisted from the stock exchange because their owners were not convinced that it was profitable to continue being on the capital market.
Sure, sure. Except that in the years 2007-2015, 114 companies were delisted from the Warsaw Stock Exchange (WGPW), while in the years 2015-2023 there were… 10 such companies. Already in the “Report on the state of the SME sector in Poland in the years 2007-2008” it was admitted that SMEs are a key sector of the economy, but for them access to capital through this stock exchange remains a “challenge”. So, Minister, how is it?
How the Stock Market Thrives Before 2015
Here are some quotes from Polish representatives of the world of finance, capital market and banking, who were – something astonishing in the context of the minister’s dictum – the least skeptical about the functioning of the Warsaw Stock Exchange as a place of wasted opportunities, weaknesses and lack of utility for companies a long time ago. All statements are from before 2015 and from various media:
• Andrzej Jakubiak, former president of the Polish Financial Supervision Authority: “WGPW is too small to be an attractive place for large investors. It lacks market depth and diversity of financial instruments.” (date of publication: 2013)
• Paweł Tamborski, former president of the Warsaw Stock Exchange: “Our stock exchange does not attract a sufficient number of new companies. There is a lack of innovative companies that could develop there.” (2012)
• Witold Orłowski, professor, economist: “WGPW is dominated by a few large companies, which limits investment opportunities. We need more diversity.” (2014)
• Tomasz Czechowicz, investor: “WGPW is a place where not much is happening. There is a lack of new ideas and initiatives.” (2011)
• Marcin Chludziński, president of the Warsaw Stock Exchange: “We have potential, but we need to be more open to new companies and investors. This is the key to success.” (2015).
This clearly indicates that the problem of the lack of attractiveness of the WSE for companies, especially from the SME sector, began much earlier than in the years 2015-2017, i.e. after the change of government – as the minister suggests.
The deficit is terrifying, but is it normal?
Minister Domański, quoted by ISBnews, also emphasized that in 2024 the budget deficit will fall by 0.5 percentage points – to 5.1% of GDP, but this is still far from the 2.6% from 2015, when the previous government took power. For the sake of completeness, it is worth supplementing this information with how the deficit was shaped in absolute numbers. It will also be valuable to perform an “exercise” correcting the depth of this debt for inflation.
In 2015, the budget deficit amounted to PLN 42,606.7 million. This year, it may reach PLN 164.8 billion, which is certainly cause for concern. However, all subsequent governments in Poland since 1989 have been increasing their budget debt (and this is not just a Polish syndrome). It would be more interesting to compare what the team ruling Poland for eight years (before 2015) spent on this debt, and what the next one spent on the next eight years after that date. The more than fourfold increase in the budget deficit over the last nine years is largely due to increased spending on financing the army, as well as on numerous social programs and healthcare. There have also been exceptional circumstances along the way, such as the COVID-19 pandemic, which resulted in additional spending on healthcare and support for companies and even entire sectors of the economy. It is also worth noting that the current deficit level – PLN 164.8 billion for 2024 – constitutes around 4.5% of GDP and is still acceptable by international standards.
Minister Domański hopes that economic recovery, not inflation, will reduce the budget deficit. This will be helped – as he claims – by restoring the foundations of a democratic state of law and institutional order. “Poland has turned away from soft autocracy and is boldly heading towards becoming the decision-making centre of the European Union.”
So now everything will be fine?