Poland to Refuse IMF Credit Line

Polish Finance Minister Mateusz Morawiecki. (Source: Wikimedia Commons)

Poland’s Ministry of Finance has announced that it will withdraw from the nation’s IMF reserve $9.2 billion line of credit after an analysis of recent economic reports. Economic growth is projected to be 3.8 percent for 2017, according to the IMF, and unemployment is down to a record low 6.9 percent this past quarter. Asked by reporters, Polish Finance Minister Mateusz Morawiecki said, “I have taken the decision to quit the FCL [the IMF credit line] after an analysis of tax data, macroeconomic parameters, assessment of our budget stability and currency reserve”. The Polish zloty appreciated against the euro by 2 percent on October 16, indicating that the markets have viewed this decision favorably.

It is not yet known, however, whether the Polish government will formally withdraw from its agreement with the IMF or simply let it expire. Since 2009, Poland has had access to an emergency credit line from the IMF in case the economy entered recession. This line has never been used. In January, the IMF re-approved Poland’s right to a $9.6 billion credit line until the first quarter of 2019. The total value of the credit line to the Polish Government was $9.4 million in 2009. However, in December 2016, Poland halved the value of the credit line, reducing the quarterly fee Poland paid to the IMF to keep the line open.

Mateusz Szczurek, as minister of finance for the previous Center-Right Coalition government that ruled from September 22, 2014 to November 16, 2015, first made the preparations necessary to exit this credit fund. Paweł Szałamacha, the Polish Law and Justice Party’s (PiS) first minister of finance, continued the preparation necessary for leaving the credit fund. Szałamacha kept the credit line as a hedge against an economic recession. However, this was a change from the proposed policies of past administrations, which wanted to quit the credit line back in 2010.

Since independence in 1991, there has not been a single year in Poland with negative growth. The average income has increased from $2,300 to $13,000 in the same time period. Economic forecasters project Poland will hit the $15,000 per capita mark before the end of the decade. Poland is one of the few countries whose share of global exports has increased since 1991, even with the global decrease in manufacturing. Most remarkable has been the stability of Poland’s growth since 1991, which portends even more stable wealth in the future.