## IMF Survey : Poland Renews IMF Credit Line for $33.8 Billion

_IMF News, January 18, 2013_

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## Bibliographic details
- Published: January 18, 2013

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### Overview
- The IMF’s Executive Board approved renewal of Poland’s Flexible Credit Line (FCL) for two years.
- The amount of the new FCL, which the authorities intend to treat as precautionary, will be for about $33.8 billion.
- Publication date on the page: January 18, 2013.

### Poland’s economic performance and recent slowdown
- Poland was the only European Union (EU) economy not to enter into recession during the global financial crisis and has been one of the best performers in the EU.
- The IMF observes that Poland’s economy has started to slow after showing resilience since the onset of the global economic crisis, due to sound policy frameworks and prudent economic management.
- Causes of the slowdown identified:
  - Weakening demand for Poland’s exports because most main trading partners are in the euro area.
  - Domestic demand has weakened as households and businesses consume and invest less amid uncertainty in Europe.
  - Rising unemployment and tighter credit are affecting household consumption.
- The IMF does not anticipate a recession in the year of the assessment (2013); it characterizes the situation as a growth slowdown rather than a recession.

### Benefits of the Flexible Credit Line (FCL) and rationale for renewal
- The FCL was created in 2009 for countries with very strong policy frameworks and track records in economic performance.
- Qualified countries have the flexibility to draw at any time within a pre-specified window on the credit line, or to treat it as a precautionary instrument.
- Benefits Poland has derived from having an FCL:
  - Allowed for a more flexible policy response at the onset of the global financial crisis in 2008-2009.
  - Provided useful insurance as the crisis evolved, particularly as it hit the eurozone.
  - Played a critical role in allowing the Polish government to rebuild policy space and to strengthen the institutional policy framework.
- Reasons for renewing and increasing the size of the FCL to about $33.8 billion:
  - 2013 is expected to be a difficult year for Poland and some major trading partners.
  - Poland faces some withdrawal of external funding from its banking sector.
  - Volatile capital flows may pose risks.
  - The FCL provides extra insurance, a cushion against potential risks, breathing space for fiscal consolidation and reserve accumulation, and more time for unfavorable conditions to dissipate.

### Immediate policy priorities (three areas highlighted)
- Fiscal policy:
  - The challenge is to strike the right balance between continuing belt-tightening and supporting the slowing economy.
  - The IMF assessment states that the 2013 budget appropriately balances these objectives.
- Monetary policy:
  - The central bank should continue to cut policy interest rates to support the economy.
- Financial sector:
  - New challenges will arise from the slowing economy, particularly a rise in loans that are in default.
  - Financial supervisors will need to tackle these issues going forward.

### Medium-term reforms to boost growth and jobs
- Maintain the very strong policy framework and economic underpinnings that supported resilience since the global economic crisis.
- Specific reform areas identified:
  - Raise the labor participation rate, which is described as relatively low in Poland.
  - Improve the business climate by reducing red tape and administrative obstacles to investment.
- Expected outcome of reforms:
  - Boost potential growth, help maintain stability, and create more jobs.

### Regional lessons
- Poland’s experience demonstrates that very strong fundamentals and sound policies strengthen resilience to crises.
- The IMF suggests this is a key lesson for other countries in Central and Eastern Europe.

*Source: IMF Survey: Poland Renews IMF Credit Line for $33.8 Billion, January 18, 2013.*

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Country Focus](https://www.imf.org/en/news/country-focus)
- [In The News](https://www.imf.org/en/news/search)
- [Press release](http://www.imf.org/external/np/sec/pr/2013/pr1317.htm)
- [The IMF and Europe](http://www.imf.org/external/region/eur/index.aspx)
- [Poland and the IMF](http://www.imf.org/external/country/POL/index.htm)
- [Blog: Emerging Europe lessons](http://blog-imfdirect.imf.org/2012/09/10/taking-away-the-punch-bowl-lessons-from-the-booms-and-busts-in-emerging-europe/)
- [Blog: Banks in Eastern Europe](http://blog-imfdirect.imf.org/2012/06/13/lost-found-in-eastern-europe-replacing-funding-by-western-europes-banks/)
- [FCL](http://www.imf.org/external/np/exr/facts/fcl.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/socar011813a_