February 19, 2018 / 4:39 PM / a year ago

Zloty strength no problem, reflects strong economy - Polish finAnce minister

WARSAW (Reuters) - The zloty’s present strong level is no cause for concern as it reflects the country’s robust economic fundamentals, Poland’s finance minister said.

FILE PHOTO - Teresa Czerwinska Poland's new Finance Minister attends a government swearing-in ceremony at the Presidential Palace in Warsaw, Poland January 9, 2018. REUTERS/Kacper Pempel

In an interview with Reuters, Teresa Czerwinska also said she expected the economy to remain buoyant and a clampdown on tax evasion should ensure public borrowing is lower than forecast in the 2018 budget.

The zloty was one of the world’s best-performing currencies in 2017, rising more than five percent against the euro and about 20 percent against the dollar. It has posted further gains this year.

“In the long term, excessive strengthening of the zloty is not beneficial for exports. But we have very strong economic fundamentals and a very good job market, so there is a basis for zloty strengthening,” Czerwinska said in an interview given on Friday and cleared for publication on Monday.

“For sure, its present level does not raise concerns,” she added, describing interest rates as at their optimum level.

While the economy was well placed to grow further, Czerwinska expected the rate to slow from the 5.1 percent reached in the final quarter of last year.

“We estimate that domestic demand rose by five percent in the fourth quarter, while the rebound in investments was ...about 12 percent,” she said.

Czerwinska said growth allied with government efforts since 2016 to tackle tax evasion through beefed up technological and official supervision should cut the state’s 2018 borrowing needs below the 182 billion zloty (38.89 billion pounds)

outlined in the budget.

“In the first quarter we limited general supply of debt in comparison to the same period last year. I do not rule out (similar limits) in coming quarters,” she said. Efforts to cut foreign debt as a proportion of the country’s overall debt were continuing.

Czerwinska said she saw no link between investors’ perceptions of Poland and political tensions between Polish authorities and the European Commission, which has threatened sanctions over political and judicial reforms it deems anti-democratic.

Writing by Marcin Goclowski; editing by John Stonestreet

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