The recent sell-off in the zloty will make it harder for the Polish government to keep public debt from breaching constitutionally mandated ceilings. In the extreme, policymakers face the risk of entering a self-defeating cycle of austerity, even weaker growth and fiscal slippage. But in reality, we suspect that limited FX intervention should be sufficient to avoid this outcome.
Subscriber content
Read this in full, free
Start a free trial and use one of your 10 free starter credits to unlock this piece.