Statement by IMF First Deputy Managing Director David Lipton on PolandPress Release No. 12/495
December 19, 2012
Mr. David Lipton, First Deputy Managing Director of the International Monetary Fund (IMF), made the following statement today:
“I welcome the Polish authorities’ interest in seeking a successor two-year precautionary arrangement under the IMF’s Flexible Credit Line (FCL1). Poland’s current two-year FCL arrangement for SDR 19.2 billion (about US$30 billion or 1400 percent of quota at the time of approval) ends in January 2013.
“Poland continues to have very strong economic policies and policy frameworks, including a credible inflation targeting regime, an effective financial supervisory framework, and a firm commitment to sound fiscal policies. These have allowed the authorities to retain market credibility in the face of a challenging external environment while adjusting economic policies in a timely and effective manner, as exemplified by decisive countercyclical fiscal measures over 2009-10 and impressive fiscal consolidation achieved over 2011-12.
“Currently, the Polish economy is slowing and is expected to moderate further in 2013. In the context of heightened risks to Poland’s balance of payments and significant external financing needs, I share the authorities’ view that a new FCL arrangement can play a critical role in preserving investor confidence, supporting macroeconomic policies, and providing a significant insurance against adverse external risks. I therefore intend to move ahead rapidly in seeking approval by the Fund’s Executive Board of Poland’s request early in 2013,” he said.
1 The FCL was established on March 24, 2009 and further enhanced on August 30, 2010 (see Press Release Nos. 09/85 and 10/321). The FCL is available to countries with very strong fundamentals, policies, and track records of policy implementation and is particularly useful for crisis prevention purposes. FCL arrangements are approved for countries meeting pre-set qualification criteria. The FCL is a renewable credit line, which could be approved for either one or two years. Two-year arrangements involve a review of eligibility after the first year. If the country draws on the credit line, the repayment period is between three and five years. There is no cap on access to Fund resources under the FCL, and access is determined on a case-by-case basis. Qualified countries have the full amount available up-front, with no ongoing conditions. There is flexibility to either draw on the credit line at the time it is approved, or treat it as precautionary.