The IMF’s Executive Board has approved a one-year credit line for Poland of $20.6 billion to help it weather the global economic crisis.
Poland is the second country, after Mexico, to be granted access under the IMF’s new Flexible Credit Line (FCL), which is being offered to strongly performing economies with a solid record of timely and effective policy adjustments. The Polish government has announced it intends to treat the credit line as precautionary.
“While Poland is being hit hard by the global crisis, it has preserved access to international capital markets, contrary to many peers in the region,” Poul Thomsen, the IMF’s mission chief for Poland, said.
“We agree with the authorities that the FCL will help preserve its access to capital markets, by signaling the IMF’s strong endorsement of policies and by providing assurances that the national bank has adequate reserves to intervene if the situation gets worse than expected.”
The IMF is already deeply involved in lending to those countries most hit by the crisis. IMF-supported programs are helping countries such as Hungary, Latvia, Romania, and Ukraine fill financing gaps, ease the burden of fiscal adjustment, and repair banking systems. Counting the new credit line to Poland, the IMF has to date extended loans to Europe worth more than $77 billion.
Poland has not escaped the global financial crisis. The country is being hit both through the export channel—most of Poland’s trading partners are in deep recession—and through the financial channel.
A large share of the Polish banking system is foreign owned and global deleveraging is causing a significant slowdown in credit growth. Still, the Polish economy is better placed to weather the crisis than many other countries in the region.
The country’s macroeconomic performance has been very strong in recent years. Growth has averaged about 6% from 2006 to 2008, as membership of the European Union bolstered business confidence and spurred investment. Private consumption also grew strongly, driven by rapidly rising real wages, the creation of new jobs, and record high credit growth.
But unlike many other countries in central and eastern Europe, Poland managed to keep its current account deficit relatively low and its external debt also remained stable at about 40–50% of GDP. (imf.org)