Page 45 - bne monthly magazine October 2022
P. 45
bne October 2022 Central Europe I 45
The government is subsidising the cost of purchasing coal and other heat-
ing fuels like wood pellets or oil for households with individual heat stoves. For multi-apartment buildings, which are mostly fed the heat via local district heating systems, there will be a cap of 40% in terms of how much heat compa- nies could hike their prices.
The subsidies – especially ones to ease the cost of buying coal – are anticipated to bring the estimated 1.5mn house- holds burning the commodity only limited relief. The spike in the cost of coal is due to short supply, which the government is simply unable to ramp up quickly.
Polish and foreign media have reported widely on days-long lines at coal mines, which sell coal sometimes up to three times cheaper than local distributors.
Even before the crisis, energy poverty in Poland affected as many as 1.6mn people. Experts now predict that the problem will grow much bigger.
Jaroslaw Kaczynski, the leader of the ruling Law and Justice (PiS) Party, said at a recent meeting with voters that they would need to “burn everything but old tyres and waste” in order to keep warm, a statement that the opposition said epitomised PiS’ inability to address the energy crisis in a systemic way.
Other than the energy crisis, Poles have been grappling with inflation – which hit a surprising 16.1% y/y in August, surprising the government and analysts alike, who expected price growth to have peaked at 15.6% y/y in July.
The government has long said that inflation is largely imported and is an effect of Russia’s war in Ukraine and well as lingering pandemic-caused bottlenecks in supply chains.
The National Bank of Poland nonethe- less is obliged to curb inflation and it has attempted to do so via massive hikes in interest rates, which have gone up from 0.1% to 6.25% in little less than one year.
That, however, exacerbated the cost
Households are cutting back in response to rising prices, while pressure grows on governments to ease the burden. / bne IntelliNews
of living crisis by sending mortgage repayments through the roof, to which the government responded by granting all borrowers a total of eight months of “credit vacations” – meaning the right to suspend repayments – in 2022 and 2023.
According to Prime Minister Mateusz Morawiecki, the total cost of limit-
ing energy prices will reach around PLN50bn. The cost of subsiding purchases of coal is estimated at around PLN11bn (€2.32bn), while Polish banks have complained the credit vaca-
tion scheme could set them back by PLN21bn-27bn this year and the next.
Czechs on the streets over rising costs
Czechia has experienced the biggest demonstration so far over the cost of living crisis. In a protest organised by extremist and fringe groups, 70,000 rallied in Prague's city centre on Satur- day, using the ongoing energy crisis
to criticise the country's centre-right government for not doing enough to help ordinary people, as well as for aiding Ukrainians at their expense.
Protesters’ slogans and speeches were directed against the government for
the high energy prices and for allegedly giving priority to people fleeing Russian aggression in Ukraine over Czech citizens. Some also called for negotiations with Putin over cheap gas supplies. The public media, the EU, the EU's Green Deal and Nato were other frequent targets.
The organisers plan another demon- stration on September 28, St Wenceslas Day. Unions are also planning a separate demonstration in October.
The fact that even fringe movements were able to mobilise so many protest- ers demonstrates the depth of unhap- piness in the country with the govern- ment, which is perceived as doing too little, too late to deal with the crisis.
Opposition parties held a vote of no-confidence last week and support for the populist ANO movement of former premier Andrej Babis is riding high ahead of municipal and Senate elec- tions later this month.
Inflation in the Czech Republic hit 17.5% in July, and is widely expected to breach 20% in the coming months. Despite
a thriving export business, Czechia
now has the highest electricity costs in Europe in purchasing power parity terms (PPS), a survey recently showed.
The government insists that it has done more than many in the EU but it remains hidebound by the ruling neoliberal Civic Democrat’s obsession with not raising taxes.
The government claims it has already allocated CZK177bn (€7bn) to combat inflation, and that pension hikes, one- off child benefit payments of CZK5,000 (€203), lowered taxes on gas, a waiver
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