Press Release: IMF Executive Board Approves US$20.58 Billion Arrangement for Poland Under the Flexible Credit Line
IMF News, May 6, 2009
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Bibliographic details
- Published: May 6, 2009
Arrangement details
- One-year SDR 13.69 billion (about US$20.58 billion; 1,000 percent of quota) arrangement for Poland under the Flexible Credit Line (FCL).
- The Polish authorities intend to treat the arrangement as precautionary (they do not intend to draw from the FCL).
- The arrangement is the second commitment under the FCL, after Mexico.
Rationale and features of the Flexible Credit Line (FCL)
- The FCL was created on March 24, 2009, as part of a major overhaul of the Fund’s lending framework.
- Key features:
- Particularly useful for crisis prevention purposes.
- 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.
- 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.
Executive Board assessment and Mr. John Lipsky’s statement
- Positive assessment of Poland’s pre-crisis fundamentals:
- “Poland’s economic growth has been very strong and well-balanced in recent years.”
- “Private consumption growth has been robust, the external position is sustainable, and the banking sector is well-capitalized.”
- “The avoidance of acute imbalances during the boom years reflects a very strong and timely policy implementation.”
- “A long-standing and effective inflation-targeting regime and a freely-floating exchange rate have helped build confidence in monetary institutions and anchor inflation expectations.”
- “The authorities’ EU commitments and their euro adoption target have provided a strong fiscal anchor.”
- “Banking supervision has been fully compliant with EU laws and directives.”
- Institutional strengthening cited: unification of financial supervision and creation of the Financial Stability Committee.
- Assessment of near-term risks and developments:
- Poland faces the risk of spillovers from the global crisis through both the real and financial sector channels.
- “Exports have contracted and economic activity has slowed in early 2009, reflecting a deep recession in its main trading partners.”
- “A sharp slowdown in credit growth is underway as banks have begun to tighten credit criteria.”
- “Nonetheless, Poland has maintained access to international capital markets.”
- Supportive role of the FCL for Poland:
- A precautionary FCL arrangement would support the authorities’ policy response, boost market confidence, and place Poland in a better position to manage adverse developments.
- The FCL arrangement for Poland is expected to have a positive regional impact.
Authorities’ policy response and commitments
- Monetary policy:
- The authorities have embarked on a monetary loosening cycle and stand ready to cut rates further if downside risks materialize.
- Financial sector stability:
- Safeguarded through liquidity provision and intensified surveillance.
- Fiscal policy:
- Despite the slowdown, the authorities remain committed to the 2009 state budget, primarily by cutting expenditure at the state level.
- The authorities reaffirmed their full commitment to strengthen the medium-term fiscal framework to maintain a sustainable path for public debt.
Country background and Fund relationship
- Poland joined the IMF on June 12, 1986.
- Poland’s quota is SDR 1.36 billion (about US$2.06 billion).
- The country’s latest use of Fund resources was under a Stand-By Arrangement that expired on March 4, 1996.
Press Release No. 09/153 (May 6, 2009).