US to repay a Polish debt without default statement

The US government has taken the extraordinary step of deciding to repay at least $71 million Poland owes American banks without first having the banks declare Poland in default, administration sources said.

The action was taken secretly last week on orders from the National Security Council to the Agriculture Department, which has made $1.6 billion in loans to Poland to finance grain purchases, the sources said.

The New York Times reports the decision could obligate the US government to repay $396.5 million in Polish debt owed this year.

The action circumvented Commodity Credit Corporation rules that require the banks to find a foreign country in default before the US government is forced to cover bad debts.