IMF approves loan for Polish economy

Bloomberg

The Polish government has said repeatedly the economy is one of the strongest in the region and not in need of IMF aid like that awarded to countries like Hungary or Ukraine. It plans to treat the extension of credit as a "precautionary" measure, meaning it does not intend to draw on the funds, the IMF said in a statement.

"We are now far safer from the severe turmoil in the global economy," Polish Finance Minister Jacek Rostowski told reporters in Warsaw yesterday. "It proves that the IMF considers both Poland, and its economic policy, to be strong."

The European Commission earlier this week said it expects Polish gross domestic product will contract 1.4 percent this year. Rostowski rejected the forecast, saying he thought the commission hadn’t taken into account the "resilience" of the economy and adding he expected growth slightly above zero in 2009. Poland will become the second country after Mexico to use the IMF’s new flexible credit line as its economy faces the sharpest slowdown in around a decade.

When the IMF said last month Poland was seeking the credit line, the zloty jumped to a three-month high against the euro. Rostowski said yesterday the credit line should safeguard the zloty from the impact of the crisis.

"Despite very strong fundamentals, Poland’s economy is now facing the risk of spillovers from the global crisis," John Lipsky, the IMF’s first deputy managing director, said in a statement. "A sharp slowdown in credit growth is underway as banks have begun to tighten credit criteria."

Poland qualified for the credit line, the IMF said, because of its "strong" economic policies.