[DEBATE] : New IMF "conditions" for Poland?
Riaz K Tayob
riaz.tayob at gmail.com
Wed Apr 15 23:19:32 BST 2009
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
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.
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