News Parkiet

Public finances

Public service cuts inevitable, Gronicki says

Major reduction of Poland's bloated public sector is inevitable, new Finance Minister Mirosław Gronicki told PARKIET in an interview.

'You can't have a situation where the labor market as a whole doesn't look all that great, but employment in public administration keeps rising all the time', Gronicki, a former chief economist at Bank Millennium said. 'The question is, do we have higher output, is value added by public administration growing at the same rate', he adds. Gronicki refused to discuss any details of his job-cutting plans.

Separately, Mr. Gronicki said Value-Added Tax rates in Poland have actually fallen after May 1st entry into the European Union given the country's higher GNP rates and stronger consumer demand. Gronicki wouldn't go into any details, but said budget surplus figures of 6.2 billion zloty, published by IBnGR, an independent think-tank, may be too optimistic precisely because of lower VAT collection. He also said this year's issue of government bonds may be reduced by around 10 billion zloty because initial budget estimates were too conservative.

Taxes

Poland to harmonize capital gains taxes

Polish Finance Ministry has proposed a new amendment to personal income tax regulations that would harmonize capital gains taxes on domestic and international investments. Local investors now pay 19 percent capital gains tax on any stock market gains here. The few stock traders investing on international markets have to pay regular income taxes of up to 40 percent, depending on their tax bracket.

Mutual funds

Post Office cancels plans to launch mutual fund company

Polish Post Office, the Poczta Polska, has decided to call off plans to start its own mutual fund company after reevaluating its strategy. Poczta, one of the country's largest retailers, with over 8300 outlets across Poland, decided to focus on its core business instead, state-owned firm said in a press release yesterday.

Mining

Kopex sells GBG stake

Kopex mine construction group has sold its 10.3 percent stake in Gliwicki Bank Regionalny, a small regional lender from southern Poland, to a company controlled by Leszek Czarnecki, one of the country's top businessmen. Czarnecki's the Netherlands-registered LC Corp. paid approximately 37 million zloty for these assets. Publicly traded Getin Holding financial group, a company owned by Mr. Czarnecki, already has over 70 percent interest in GBG.

Rafał Rost, chief executive of state-owned Kopex, said his company would part of the proceeds from yesterday's asset sale to buy two other mine construction firms, including ZMG Glinik, a major manufacturer of mining equipment.

Packaging

Warta Glass may list its shares in Warsaw

Warta Glass bottle-maker could lists its shares on the Warsaw Stock Exchange, joining Krosno and Irena glass-makers, sources at the company told PARKIET recently. Poland's third largest glass-manufacturer has largely completed its 150 million zloty spending program that has doubled production capacity at Warta's three glass-making plants. Warta Glass has three production facilities, Warta in western Poland, Jedlice in the south and Huta Panevezio Stiklas in Lithuania. Combined sales at the three plants are expected to increase to approximately 235 million zloty.

Engineering

Italian firms to buy Energomontaż-Północ

Polish SEC has cleared stock sale plans of Energomontaż-Północ, a troubled civil engineering company from Warsaw, CEO Wiesław Różacki told PARKIET yesterday. Energmontaż, which has carved up a niche market upgrading Polish power plants, said it wants to sell almost 11.7 million new shares at 3.5 zloty each, for a total of 40.5 million zloty. It now has 4.3 million shares outstanding.

Two Italian firms, Luxembourg-registered Gloria and Sices International, with corporaNetherlands, have already agreed to buy new shares of Energomontaż, effectively taking over the company. Różacki says the offering will be completed by early October.

Energomntaż, which begun trading on the WSE in mid-1998, has annual sales of approximately 250 million zloty. The group lost a total of 33.6 million zloty over the last six quarters.