Poland under pressure from financial markets says PM

Poland's record-high bond yields are a result of pressure from financial markets, Mateusz Morawiecki, the Polish prime minister, has said.

Poland's bond yields crossed the 9-percent mark on Friday, a level last seen more than 20 years ago, prompting the state-run development bank BGK to forgo a planned bond auction as it expected to sell its bonds at lower rates.

The Polish prime minister said in the northern city of Gdańsk on Saturday that a number of countries had found themselves under increased pressure from financial markets owing to a rate-increase cycle by the US Federal Reserve and the European Central Bank.

Additionally, Morawiecki said, emerging economies and those aspiring to be included among developed markets, such as Poland, had seen their currencies weaken.

According to Morawiecki, Poland's significant current account deficit, which is seen by financial markets as a risk factor, resulted from high energy prices, but he expressed hope that the recent arrangements made at an EU summit would help Poland decrease its current account deficit by implementing a new mechanism of gas price calculation.

The opposition has accused the government of acting against the Polish central bank's efforts to fight inflation, which reached 17.2 percent in September. Critics say that while the central bank is raising interest rates, the government is flooding the market with a vast array of social programmes and subsidies which, as a consequence, was driving up inflation.

"In the domestic fiscal policy we'll strive to tighten it in the near future," Morawiecki pledged. "We're not planning any other expenditures apart from those already planned in the budget."

 According to the tradingeconomics.com website, Poland's bond yields were the fifth highest in Europe as of Friday, at 8.76 percent, behind Hungary, Turkey, Russia and Romania. The Czech Republic, which is in sixth place, is paying bond yields at 6.37 percent.