Poland’s banks are bracing for an unprecedented shock as the Covid-19 crisis pushes the country towards its first recession for nearly 30 years.
Analysts at Raiffeisen Bank International (RBI) are predicting that the economy, which expanded by 4.1% in 2019, will contract by 2% this year after Poland went into lockdown on March 11.
To mitigate the effects of Covid-19, the Polish government announced on March 18 a stimulus package purportedly worth Zl212 billion ($49.9 billion).
In practice, this includes limited support for Polish businesses.
Liquidity measures previously announced by the central bank, including Poland’s first quantitative easing programme and a local version of the targeted longer-term refinancing operation (TLTRO), accounted for a third of the headline number.
Guarantees for corporate credit from the BGK development bank and a new public investment fund accounted for most of the remainder, leaving just Zl29 billion for firms and workers.
The package, which was widely criticized in Warsaw as inadequate, sparked fears that the banking sector would be asked to bear the brunt of the crisis – particularly as it came hard on the heels of the central bank’s decision to remove its systemic capital risk buffer.
