Statement by the IMF Staff Representatives

Poland is placed high among the most successful transition economies owing to its strong macroeconomic and structural policies. Executive Directors commended this development, and stressed the need to maintain monetary and fiscal policies. They appreciated the tax and pension systems, banking supervision and regulatory framework, and industrial restructuring and privatization. They welcomed the policymakers' focus on ensuring progress toward membership in the European Union accession. They agreed that the country's statistical base is adequate for surveillance, and encouraged the authorities to improve the quality of macroeconomic data.

Abstract

Poland is placed high among the most successful transition economies owing to its strong macroeconomic and structural policies. Executive Directors commended this development, and stressed the need to maintain monetary and fiscal policies. They appreciated the tax and pension systems, banking supervision and regulatory framework, and industrial restructuring and privatization. They welcomed the policymakers' focus on ensuring progress toward membership in the European Union accession. They agreed that the country's statistical base is adequate for surveillance, and encouraged the authorities to improve the quality of macroeconomic data.

1. This statement highlights economic and policy developments in Poland since the circulation of the staff report for the Article IV consultation (SM/00/36, February 18, 2000). This additional information does not change the broad thrust of the staff appraisal.

  • In January, the current account deficit amounted to US$1.2 billion, about US$400 million less than December 1999, that still above its level in second half of 1999. Merchandise exports and imports declined in January, reversing the steady increases in both in late 1999. Foreign direct investment financed almost 2/3 of the current account deficit in January. International reserves stood at US$25.6 billion as of end-February, slightly higher than at end-December 1999.

  • Industrial sales in January were 7.9 percent higher than a year earlier, well below the double digit increases recorded in late 1999. The decline in recorded growth rates coincides with methodological changes in the sample, however, which may distort the comparison. The registered unemployment rate continued its upward trend, reaching 13.6 percent in January from 13 percent in December 1999.

  • Inflation rates edged higher as the January consumer price index increased 1.8 percent month-on-month, to reach 10.1 percent year-on-year. Seasonally adjusted food price inflation started to stabilize and nonfood price inflation decelerated.

2. The Monetary Policy Council (RPP) raised the official interest rates by 100 basis points on February 23, 2000, bringing the central intervention rate to 17.5 percent, the discount rate to 20 percent, and the Lombard rate to 21.5 percent. In its decision, RPP cited concerns over high inflation expectations and reaffirmed its commitment to achieving its end-2000 inflation targets. It also adopted a restrictive bias for the near future.

3. The zloty exchange rate remained strong, despite the weak current account data. Supported by large foreign exchange inflows, the zloty moved from 2 percent above parity at the beginning of the year to 5-6 percent above the parity recently.

Republic of Poland: Staff Report for the 1999 Article IV Consultation
Author: International Monetary Fund