MacroScope

Interesting to see that Poland wants to squeeze out more income from its state-owned enterprise (SOE) sector in the face of slowing economic growth and financing pressures.

Warsaw wants to double next year's dividends from stakes in firms ranging from copper mines to utility providers to banks.

Fellow euro zone aspirant Lithuania has also embarked on reforms aimed at increasing dividends sixfold from what UBS has dubbed "the forgotten side of the government balance sheet". It wants to emulate countries such as Sweden and Singapore where such companies are managed at arm's length from the state and run along strict corporate standards to consistently grow profits.

The impetus isn't entirely ideological. Poland and Lithuania are desperately trying to balance their books and under European Commission rules, privatisation proceeds cannot be taken into account when calculating the budget deficit but SOE dividends can.

But "sweating" government assets to yield higher profits doesn't always come easy for central and eastern Europe. After all, this is a region where state ownership has been synonymous with inefficiency and stagnation.

The pension grabs by austerity-averse governments in Poland and Hungary could impact this year’s planned reforms in the Czech Republic, causing another emerging European Union member to soften its approach to a looming debt threat tied to an aging population.

Budapest has already drawn criticism for right-wing Prime Minister Viktor Orban’s plan to seize $14 billion of assets in privately held pension accounts to plug a budget hole without having to cut state spending. Poland’s plans, while not as extreme, have also raised eyebrows. Poles now pay about 7 percent of their paychecks into private accounts, but Prime Minister Tusk is planning to cut that to about 2 percent, taking the extra cash to reduce debt and replacing those funds with future state obligations.

To their credit, all three countries are among a group of nine who have lobbied Brussels, without much effect, for big exemptions to their pension reform costs. But while using funds designated for private pension accounts will cut the budget deficit in the short term, economists say it is only a trade-off between replacing short-term deficits with future pension costs, a good way for governments to stay popular but bad for long-term financial health.

If one were to believe the noise coming from right-of-centre politicians in Prague, the Czechs are on the brink of a Greece-style budget meltdown, and victory by the leftist Social Democrats in a May 28-29 election would plunge them into economic collapse.

An ad in newspapers this week from the right-wing Civic Democrats (ODS) showed masked Greek rioters in front of a burning barricade. “Socialists in Greece – the same as in the Czech Republic”, the headline read. Alongside, a picture of Jiri Paroubek, leader of the Social Democrats (CSSD) bore the caption “CSSD = State Bankruptcy”.

The ad angered the Greek embassy, which summoned ODS’s campaign manager to complain. It also puzzled many analysts as to why a country with relatively sound economic fundamentals could be worried about national bankruptcy in the short term.