[DEBATE] : New IMF "conditions" for Poland?

[Riaz K Tayob]

Poland Gets $20 Billion Credit Line From I.M.F.

By CARTER DOUGHERTY
Published: April 14, 2009

FRANKFURT — The International Monetary Fund granted Poland a $20.5 
billion credit line on Tuesday, using a facility intended to backstop 
countries with sound economic policies that have been caught short by 
the global financial crisis.

With the announcement, Poland became the second country — Mexico said on 
April 1 that it was seeking $47 billion — to tap a new fund that the 
I.M.F. is using to broaden its mission beyond assisting countries in 
acute need of credit.

The major difference with this type of loan is that the country has to 
meet certain criteria on sound economic management before getting the 
loan, rather that adopting such policies after securing I.M.F. help.

"Poland has a sustained record of sound economic policies," Dominique 
Strauss-Kahn, the I.M.F. managing director, said in a statement. "Its 
economic fundamentals and policy framework are strong, and the Polish 
authorities have demonstrated a commitment to maintaining this solid 
record."

The Polish zloty, which like other central and eastern European 
currencies has been pounded by the markets in recent months, was mixed 
after the announcement. It fell 1.2 percent against the dollar after the 
announcement, but the euro was 2 percent lower against the zloty.

Jacek Rostowski, the Polish finance minister, says the money will help 
make "the Polish economy immune to the virus of the crisis and 
speculative attacks," The Associated Press reported from Warsaw.

Poland's problems contrast starkly with those of countries like Hungary, 
Latvia and Romania, which have recently gone to the fund from an acute 
need for assistance to meet immediate financial obligations.

By the standards of the time, Poland's outlook is relatively sunny.

Fitch Ratings early this month forecast zero growth in Poland, which was 
downbeat news since many economists said they believed the country might 
yet eke out a positive number by year's end. But Fitch expects a 
contraction of 3.1 percent for all of Central and Eastern Europe.

The credit line also underscores the determination of the big 
international financial institutions, like the I.M.F. and the World 
Bank, to put in place policies that might prevent a worsening of the 
crisis, rather than waiting for conditions to deteriorate further. 
European governments, in particular Germany, have been reluctant to do 
so for fear that it would damp the incentives for laggards to adopt 
sounder economic policies.

The new fund, known as the Flexible Credit Line Arrangement, highlights 
the central role being played by the I.M.F. in fighting the crisis. 
Expanding the resources available to the fund was a crucial outcome of 
the meeting of Group of 20 nation leaders in London this month.

http://www.nytimes.com/2009/04/15/business/global/15imf.html