Desperate times call for desperate measures

Bloomberg.com:

Poland's SLD Pledges More Spending Before September

May 9 (Bloomberg) -- Poland's ruling Democratic Left Alliance said it will boost social spending before September's scheduled elections after popular support for the party fell below the level required to hold any seats in the new parliament.

The party aims to raise the minimum wage, boost pensioners' incomes and give more to students, the party's leader, Jozef Oleksy, said on public radio Program III yesterday.

It is time ``to focus on the poorest part of society,'' he said. The Alliance will vote on ``appropriate regulations'' to boost social spending.

Alliance lawmakers on May 5 rejected a move by Prime Minister Marek Belka and opposition parties to dissolve parliament and force early elections. Poland is struggling to cut its budget deficit to below 3 percent of gross domestic product to meet terms top adopt the euro before the end of this decade.

The zloty traded at 4.118 per euro at 9:20 a.m. in Warsaw, unchanged from Friday. It dropped to 3.213 from 3.20 per dollar. The benchmark five-year bond due 2010 traded at 101.30 per 1,000 ($340) face value, unchanged from Friday, keeping the yield at 5.435 percent.

Declining Support

The Alliance, which had 51 percent support in polls when it took office in 2001, is now favored by between 3 percent and 5 percent of voters, according to April surveys by the four largest Polish polling centers. Its coalition partner, the Labor Union, had 1 percent support and probably will drop out of parliament.

Poland, with a population of 38 million, has more than 9 million pensioners and more than 3 million unemployed, taking advantage of social benefits and representing ``quite a broad lobby interested in a further increase of social benefits,'' said Marcin Mrowiec, an economist at Bank BPH in Warsaw.

About 7.5 million people are registered as employed and paying contributions to the social security and health care systems, according to Central Statistical Office figures.

``Statistically then, it is much easier to win support from this part of society,'' Mrowiec said.

Oleksy also said the party ``will meet with Belka on cooperation and his political orientation.'' Oleksy didn't confirm a report that the party may seek to dismiss Belka through a no- confidence vote.

No Confidence

Another Alliance official, Marek Dyduch, said the party may table a motion of no confidence against Belka if social bills are not agreed, Polish newswire PAP reported on May 7. Dyduch also said the party may hold talks with opposition parties to gain their support for a new cabinet to govern through September.

Belka, who stepped down after lawmakers voted against dissolving parliament four months ahead of schedule, was asked by President Aleksander Kwasniewski to remain in office until September.

Belka has said he supports the new Democratic Party, co- founded by former Economy Minister Jerzy Hausner, who quit the Alliance in February. Belka took part in the party's first congress yesterday, though didn't sign a declaration of membership, Hausner said.