The Executive Board of the International Monetary Fund (IMF) today approved
a successor two-year arrangement for Poland under the Flexible Credit Line
(FCL) with reduced access in an amount equivalent to SDR 6.5 billion (about
€8.24 billion, or 159 percent of quota). The Polish authorities intend to
treat the arrangement as precautionary and do not intend to draw on the
FCL.
Poland’s first FCL arrangement was approved on May 6, 2009 (see
Press Release No. 09/153). Successor arrangements were approved on July 2, 2010 (see
Press Release No. 10/276); January 21, 2011 (see
Press Release No. 11/15); January 18, 2013 (see
Press Release No. 13/17); and January 14, 2015 (see
Press Release No. 15/05).
Following the Executive Board discussion on Poland, Mr. Mitsuhiro Furusawa,
Deputy Managing Director and Acting Chairman of the Board, made the
following statement:
“Poland continues to benefit from very strong economic fundamentals and
policy frameworks. Economic growth remains robust, unemployment continues
to decline, and deflation has dissipated. The current account is close to
balance and international reserves have increased. Moreover, the banking
system remains liquid and well capitalized. Poland’s institutions and
policy frameworks rank favorably among peers.
“The authorities are committed to maintaining strong policies and
institutions to support inclusive growth, which remains their key priority.
In particular, the authorities intend to maintain sustainable public
finances by keeping the fiscal deficit below the Excessive Deficit
Procedure limit of 3 percent of GDP in 2017 and by starting fiscal
consolidation in 2018. Furthermore, the authorities remain committed to
safeguarding financial stability through effective oversight and
implementation of the new macroprudential and bank resolution frameworks.
In this regard, the authorities’ revised approach to foreign exchange
mortgages aimed at addressing consumer protection concerns while preserving
banking sector soundness and stability is a welcome step.
“Notwithstanding the strengths of the Polish economy, external risks remain
elevated. A possible growth slowdown and banking sector stress in the euro
area could have significant spillovers via trade, financial, and confidence
channels. A faster-than-expected pace of monetary policy normalization in
the United States and bouts of financial market volatility could affect
Poland’s economy, given its sizable external financing needs. Furthermore,
the upcoming Brexit negotiations and a heavy election calendar in Europe in
the next twelve months add to uncertainties.
“Against this background, the new two-year precautionary Flexible Credit
Line (FCL) arrangement would provide valuable insurance against external
shocks, supplementing Poland’s flexible exchange rate and strong reserve
buffers. At the same time, the authorities’ request for a significantly
lower access sends a strong signal of their intention to proceed with a
gradual and smooth exit from the FCL arrangement once external risks
subside.”
The IMF established the FCL on March 24, 2009 and further enhanced it on
August 30, 2010 (see
Press Release No. 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 (see
Press Release No. 09/85). The FCL is a renewable credit line, which can 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.
Poland is a member of the IMF since 1986 and has a quota of SDR 4,095.40
million (about €5,190.8 million).
