Poland’s FinMin swept aside: How this may affect markets

Catherine Boyle in Warsaw
Polish PM names new finance minister

Poland's prime minister has fired the man in charge of shepherding Poland through its sustained period of slowing growth.

Jacek Rostowski, who had been the country's finance minister for six years, was widely respected outside the country and was even rated one of the best at his job in Europe by the Financial Times. However, the British educated ex-economist was unpopular with Poles and, with elections due in 2015, Prime Minister Donald Tusk decided to bring a new face into the cabinet.

Tusk told a news conference following the announcement: "For the next leap in our development, we need new energy."

The Prime Minister has appointed Mateusz Szczurek, an economist with no political experience and currently chief economist for Central and Eastern Europe at ING Bank in Warsaw, to succeed Rostowski. Szczurek is widely viewed as one of the most respected economists in Poland.

The Polish zloty fell slightly against a raft of currencies, including the U.S. dollar, euro and pound in early trading on Wednesday following the announcement. The main Warsaw stock market index, the WIG20, fell by 0.6 percent.

Szczurek, whose name had not previously been linked with the post, is viewed as a relative positive for the markets, according to Abbas Ameli-Renani, emerging markets strategist at Royal Bank of Scotland.

"Most of the alternatives were fairly big names in their own right and would have had strong views about where the government should head," Ameli-Renani said.

"This guy is actually a fairly pleasant surprise."

The business community in Warsaw also seemed to welcome Szczurek, who has a PhD from the University of Sussex. One leading lawyer, Pawel Debowski, head of Central Europe at Dentons, told CNBC that the appointment is "good news but of course it depends what he does."

(Read more: Where to put your money in emerging Europe)

Nicholas Spiro, managing director of Spiro Sovereign Strategy , says Tusk's move "smacks of desperation" as his coalition government's lead in parliament shrinks to a tiny number of seats.

"Szczurek has a good feel for markets which is important right now. His biggest challenge, however, will be to make the shift from bank economist to politician at a time of reform fatigue and extremely weak growth in Poland."

There has been frustration within the Warsaw's business community at the lack of action on the part of the government to stimulate growth. While Poland was the only European Union country to avoid recession after the credit crisis, its growth has slipped from the heady days of the early twenty-first century, with just 0.6 percent expansion in gross domestic product (GDP) in the third quarter of 2013.

Reform fatigue is setting in, and with it support for the left-wing Law and Justice (PiS) has risen.

(Read more: Poland: Paths of glory or roads to perdition?)

The European Bank for Reconstruction and Development, which helped Poland and other Eastern European countries move from Communism to capitalism, has warned that the entire region risks being "stuck in transition" if the pace of reform is not stepped up.

Proposed reforms to the Polish pension system, where the government is essentially taking back bonds worth 121 billion zlotys ($39 billion) owned by private pension funds, to reduce its own deficit, have been extremely negatively viewed by the country's middle class – and investors.

The reforms alienated the markets when they were first announced, but are now factored in to market thinking on Poland, Ameli-Renani said.

"It seems as we are going to see continuity of policy, but with a fresh face," he added.

- By CNBC's Catherine Boyle. Twitter: @cboylecnbc.