Press Release: IMF Executive Board Approves New Two-Year US$33.8 Billion Flexible Credit Line Arrangement for Poland
IMF News, January 18, 2013
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Bibliographic details
- Published: January 18, 2013
Overview
- Date of press release: January 18, 2013.
- The Executive Board approved a successor two-year arrangement for Poland under the Flexible Credit Line (FCL) in an amount equivalent to SDR 22 billion (about US$33.8 billion, or 1,303 percent of quota).
- The Polish authorities stated they intend to treat the arrangement as precautionary and do not intend to draw on the FCL.
Recent and historical context
- Poland’s first FCL arrangement was approved on May 6, 2009 (Press Release No. 09/153).
- Successor arrangements were approved on July 2, 2010 (Press Release No. 10/276), and January 21, 2011 (Press Release No. 11/15).
- The FCL was established on March 24, 2009 and further enhanced on August 30, 2010 (Press Release No. 10/321).
IMF assessment and rationale (statement by Mr. David Lipton, First Deputy Managing Director and Acting Chairman of the Board)
- Key positive fundamentals and frameworks:
- “Poland has very strong economic fundamentals and policy frameworks.”
- “A credible inflation targeting regime has helped contain inflation.”
- “The flexible exchange rate has played a key stabilizing role.”
- “The sound financial supervisory framework has contributed to a well-capitalized, liquid, and profitable banking system.”
- “Broadly adequate international reserves and the precautionary FCL arrangement have helped maintain market confidence.”
- Policy achievements cited:
- “Skillful macroeconomic management underpinned Poland’s solid recovery in 2010-11, allowing a gradual restoration of policy buffers despite the challenging external environment.”
- Measures included “substantial fiscal consolidation, steady reserve accumulation, measures to mitigate risks related to foreign currency lending, and reforms to boost long-term growth potential.”
- Risks and near-term outlook:
- “The economy is feeling the effects of headwinds from the rest of Europe, and growth has slowed since early 2012.”
- “Economic activity is projected to moderate further in 2013, with risks stemming from Poland’s substantial trade and financial linkages in the region.”
- “Heightened risks to the balance of payments remain a key concern for Poland, and the challenging growth environment may also make the country more vulnerable to external shocks.”
- Purpose of the successor FCL:
- “A successor two-year FCL arrangement, which the authorities intend to continue to treat as precautionary, will bolster Poland’s buffers against heightened external risks, help sustain market confidence, and continue to support the authorities’ overall macroeconomic strategy.”
Features of the Flexible Credit Line (FCL) as described
- 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 (Press Release No. 09/85).
- 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; 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.
Poland-specific facts and intentions
- Poland is a member of the IMF since 1986.
- Poland has a quota of SDR 1,688.40 million (about US$2,594.28 million).
- The Polish authorities intend to treat the two-year FCL arrangement as precautionary and do not intend to draw on it.
Press Release No. 13/17, January 18, 2013.