Why Poland should be worrying markets

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Secret tapes of Poland's central bank governor and its interior minister apparently plotting to overthrow the finance minister are threatening to throw the country into turmoil.

The saga, if true, could irrevocably damage the reputations of the central bank and the government of Prime Minister Donald Tusk ahead of elections next year.

In the tapes, recorded in July last year, Marek Belka, head of the National Bank of Poland, puts pressure on Interior Minister Bartlomiej Sienkiewicz to "appoint a technical, nonpolitical finance minister who will find full support from the central bank" – in return for the central bank boosting the economy ahead of 2015 elections. The central bank has claimed that the tape is taken out of context.

Mere months after it was made, Jacek Rostowski, who had served six years as finance minister, left office and was succeeded by Mateusz Szczurek, an economist with no political experience. Rostowski had previously publicly criticized Belka's actions during the downturn Poland experienced in 2012-13.

"This seriously compromises Belka's capability to hold office as the head of the central bank but if he does decide to stick around (which does seem like his stance at this point) – it will definitely be a long and complicated path to get him out of office, especially as these matters lay firmly in PM Tusk's hands in Poland and he is unlikely to officially call for the governor's resignation," Ishitaa Sharma, Citi foreign exchange strategist, wrote in a research note.

The zloty moved lower in trading Monday, ahead of an expected press conference by the Prime Minister on Monday afternoon.

In his four years in office, Belka has become one of the most important figures behind Poland's emergence as one of the most successful economies in the former Soviet bloc, and the sixth largest economy in Europe. Economic growth in the country is expected to accelerate to 3.3 percent this year. However, the country is also at risk of deflation, with inflation in May just 0.2 percent higher than May 2013. The central bank's target is 1.5-3.5 percent.

"Belka is generally respected for the job he has done heading the NBP in difficult circumstances, and in some respects the fact that the Polish economy is in something of a sweet spot of rising growth, low inflation, a generally solid balance sheet, and reasonably healthy banks, is due to the NBP and Belka's management of policy and the institution," Timothy Ash, head of emerging markets research at Standard Bank, wrote in a research note.

Belka, himself a former Prime Minister and Finance Minister of Poland, said in an interview with CNBC just after Rostowski was put aside for Szczurek, that he welcomed the appointment of a technocrat.

"The revelation that the Polish government was apparently leaning on its central bank to pump-prime the economy ahead of next year's parliamentary election is bad enough. That Mr Belka himself was, it appears, not only willing to cooperate but was seeking to undermine his own MPC is doubly damaging," Nicholas Spiro, managing director at Spiro Sovereign Strategy, told CNBC.