POLAND has taken two significant steps recently to improve its financial condition, strengthening the nation's market reform foundation.
Following intense negotiations, Polish officials last Friday announced a landmark debt-restructuring deal with creditor commercial banks. The deal will cut Poland's current $12.3 billion debt to commercial banks by about 40 percent.
The agreement should greatly enhance Warsaw's financial credibility, increasing the nation's ability to attract new foreign investment and loans. ``Thanks to the agreement, Poland's economic development will have a solid basis,'' the Associated Press quoted Polish Prime Minister Waldemar Pawlak as saying.
The way for the commercial bank debt restructuring was paved a week earlier when the Polish parliament - controlled by left-wing parties with strong links to the former Communist Party - approved an austere national budget of $31.6 billion.
Under budget guidelines, the deficit will be limited to about $3.8 billion, or 4.1 percent of gross national product (GNP). That should enable Poland to obtain new loans from the International Monetary Fund, which advises countries making the transition to a market economy to limit deficits to under 5 percent of GNP.
The strict budget also cements an agreement scheduled to go into effect next year that should reduce Poland's $30.6 billion debt to Western governments by 20 percent.
The debt relief gives more breathing space to a Polish economy that is showing signs of recovery. According to government estimates, the Polish economy should grow 4.5 percent in 1994, while yearly inflation drops to about 23 percent.
