IMF Executive Board Completes Review of Poland’s Performance Under the Flexible Credit Line

Press Release No. 09/383
November 2, 2009

The Executive Board of the International Monetary Fund (IMF) today completed its six-month review of Poland’s qualification for the arrangement under the Flexible Credit Line (FCL) and reaffirmed the country’s continued qualification to access FCL resources. The Polish authorities have indicated that they intend to continue treating the arrangement as precautionary.

The one-year arrangement with Poland for SDR 13.69 billion (about US$21.76 billion) was approved on May 6, 2009 (see Press Release No. 09/153) and it was the second commitment approved under the IMF’s recently created FCL.

Following the Executive Board discussion of Poland, Mr. John Lipsky, First Deputy Managing Director and Acting Chair, made the following statement:

“Poland is expected to avoid a recession this year and grow modestly next year. The economy’s limited reliance on exports, flexible exchange rate, and contained external and internal imbalances, which provided room for counter-cyclical policies, acted as a shock absorber. In line with regional trends and helped in part by the FCL arrangement, external pressures have abated, asset prices stabilized and the zloty has appreciated. Market access has improved, with recent successful government bond issuances on international markets. Private capital flows are also gradually recovering. The banking system remains well buffered, but risks related to the quality of the loan portfolio remain, and credit growth has declined sharply.

“Poland’s very strong policy framework, which underpins its qualification for the FCL, has allowed the authorities to take measures to mitigate the economic slowdown and maintain macroeconomic stability. With subdued inflation, monetary policy has been accommodative during the first half of the year. Measures have also been taken to safeguard financial stability, including by reversing the fall in capital buffers and meeting liquidity needs. As for fiscal policy, automatic stabilizers and discretionary measures adopted before the crisis are providing considerable counter-cyclical stimulus. While euro adoption has been delayed, the authorities remain committed to preserve medium-term fiscal sustainability and a credible monetary policy framework underpinned by inflation targeting and a flexible exchange rate.

“Against this backdrop, the Executive Board today reaffirmed that Poland continues to meet the qualification criteria for the FCL. Accordingly, resources under the FCL—which the authorities have indicated that they intend to continue to treat as precautionary—will remain available as envisaged through May 5, 2010,” Mr. Lipsky stated.



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