THIS month's visit to Washington by Poland's new Finance Minister, Andrzej Olechowski, signals his government's intention to face the serious problems of its rising budget deficit. He took an optimistic tack, calling International Monetary Fund (IMF) budget targets "realistic." The new Polish government is bullish, emphasizing that the private sector has been growing briskly and now accounts for a quarter of industrial production. Foreign exchange reserves are strong. Inflation is down, as are shortages,
hoarding, and long lines. United States foreign assistance has played a critical role in this progress.
American assistance to Poland is designed to help entrepreneurs directly through loans and business advice and encourage the government to create the right climate for trade and investment in the private sector. In 1990, the US granted $200 million to the Polish Stabilization Fund. Our encouragement to other donors helped create a $1 billion Fund. With this support Poland achieved an important base for its new free market economy - currency convertibility. The US also led the way in reducing Poland's off icial debt by 70 percent and securing a 50 percent reduction from Poland's other creditors.
Using innovative approaches, we set up the Polish-American Enterprise Fund, which operates as a private equity pool that also makes loans. Over $90 million has been committed to equity investments and loans - more than 700 of such loans going to Polish entrepreneurs. One of these was made to "Secura BC Ltd.," a private company that manufactures products such as plastic coverings and disposable gloves. In less than a year, owner-manager Jacek Bodasinski proudly reported that his firm had tripled revenues and doubled employment. Mr. Bodasinski wants to expand his product line and views the European Community as a future marketplace. The Enterprise Fund's investment was the catalyst for Secura's success.
The US pushed a privatization support program by conducting a competition among American accounting and law firms as well as investment banks. We discussed this mechanism with the respective governments as the project developed, and since. Three consortia were selected and their assistance is in great demand in Central and Eastern Europe. Governments and managers must first establish priorities for their countries' privatization efforts. An American consortium then provides advisors to help work out laws
and regulations, establish enterprise valuations, or sell state-owned companies.
IN one major project, Poland's LOT National Airline and the Ministry of Privatization reviewed the qualifications of several US companies in the consortium and chose a firm to develop a privatization plan for the airline. AID has also helped the Poles privatize their glass products sector and is currently supporting negotiations for a new glass company joint venture.
Other assistance includes:
* Advisers to the Polish National Bank helping develop regulations for the 80 new private banks and privatization of the remaining commercial banks.
* A Polish Business Advisory Service which funds advisers for privatizing state-owned firms and helping medium-sized private businesses start up.
* A long-term adviser to assist the Polish Parliament and several ministries involved in economic restructuring, helping draft laws to facilitate foreign investment.
But citizen volunteers flocking to Poland to help the nation out of its socialist slumber are the secret strength of the US assistance program. The International Executive Service Corps recruits volunteer retired US businesspeople to help Polish companies. They have assisted 60 private companies and several government agencies working on privatization. Over 240 Peace Corps volunteers teach English, assist small business development, and help repair the extensive environmental damage in Poland. With just a bit of the US taxpayer's dollar for airfare and administrative costs, US private voluntary organizations are changing the landscape.
For example, Volunteers in Overseas Cooperative Assistance (VOCA) have helped 180 Polish farm projects by sending US farmers and their spouses to live with Polish farm families. I visited one such American volunteer, dairy farmer Damon Szymanski from Pulaski, Wisconsin. Damon raised enough money from Wisconsin cooperatives to translate and publish a book on private agricultural cooperatives for nationwide distribution in Poland. He was invited to present his views to the Polish Parliament and these ideas
have been incorporated in a new law on private cooperatives.
Imagine the effect of hundreds of Damon Symanskis throughout Eastern Europe and it's easy to see why the top Polish foreign aid official has expressed great appreciation for the US assistance program, calling it an "important instrument" to "reshape the socioeconomic system."
The US assistance program has become known for providing assistance quickly and directly to the private sector. Our streamlined procedures have cut delivery time to less than half that of other aid programs. Most importantly, the program is designed to be transitional - to help the Central and Eastern Europeans create jobs for themselves, to stand on their own feet and grow as partners in the vibrant international economic community - becoming a better market for US exports as well.