IMF Executive Board Approves US$20.43 Billion Arrangement for Poland Under the Flexible Credit LinePress Release No. 10/276
July 2, 2010
The Executive Board of the International Monetary Fund (IMF) today approved a one-year successor arrangement for Poland under the Flexible Credit Line (FCL) ) in the amount equivalent to SDR 13.69 billion (about US$20.43 billion; 1,000 percent of quota). The Polish authorities intend to treat the arrangement as precautionary and do not intend to draw from the FCL.
The FCL was established in the context of a major overhaul of the Fund’s lending framework on March 24, 2009 (see Press Release No. 09/85 and Public Information Notice 09/40). The FCL is designed for crisis prevention purposes as it provides the flexibility to draw on the credit line at any time. Disbursements are neither phased nor conditioned on compliance with policy targets as in traditional IMF-supported programs. This flexible access is justified by the very strong track records of countries that qualify for the FCL, which gives confidence that their economic policies will remain strong.
Following the Executive Board’s discussion on Poland, Mr. John Lipsky, First Deputy Managing Director and Acting Chair, made the following statement:
“Poland’s macroeconomic performance was very strong in the decade leading up to the global crisis, underpinned by a sustained track record of sound economic policies. Inflation was successfully brought down to low single digits under the inflation targeting regime and a flexible exchange rate, the commitment to the EU Stability and Growth Pact helped to lower the fiscal deficit and limit government debt, and the strong financial supervisory framework kept the financial system sound.
“The strong policy frameworks allowed the authorities to undertake countercyclical monetary and fiscal policies in response to the global crisis. Financial sector stability was preserved through liquidity provision and intensified supervision, and Poland secured access to a one-year FCL arrangement. As a result, Poland was the only EU economy to avoid recession in 2009, and the government maintained access to international capital markets on favorable terms.
“On the back of these strong policy measures and improving global economic conditions, GDP growth has picked up and asset prices have recovered from troughs seen at the height of the crisis. Looking forward, GDP growth is expected to rise gradually. The authorities remain committed to very strong macroeconomic policies and intend to continue to react as needed to any future shocks that may arise.
“Nonetheless, sizeable downside risks remain, stemming from the still-fragile economic outlook in the euro area and the possibility of further spillovers from financial strains in other parts of Europe. It is against this background that, at the authorities’ request, the Executive Board today approved a one-year arrangement under the IMF’s FCL, which the authorities intend to treat as precautionary.
“Poland’s very strong policy frameworks and economic fundamentals, together with the additional insurance provided by the successor arrangement under the FCL, put Poland in a very strong position to deal with potential risks and pressures in the event that external conditions deteriorate.”
Poland joined the IMF on June 12, 1986; its quota is SDR 1.36 billion (about US$2.06 billion).