IMF approves credit line for Poland

Wednesday 06 May 2009 19.12
IMF credit line - Precautionary action
IMF credit line - Precautionary action

The International Monetary Fund said this evening that it had approved a 'precautionary' credit line of $20.58 billion to help Poland boost its reserves and weather the global economic crisis.

The arrangement for Poland is the second IMF commitment after Mexico under the Fund's 'flexible credit line' created in March to help nations cope with the current financial turmoil that had slammed the brakes on growth.

'The Polish authorities intend to treat the arrangement as precautionary, which means that they do not intend to draw' from the credit line, an IMF statement said.

The IMF said that 'despite very strong fundamentals, Poland's economy is now facing the risk of spillovers from the global crisis through both the real and financial sector channels.'

It said the country's exports had contracted and economic activity had slowed in early 2009, reflecting a deep recession in its main trading partners.

'A sharp slowdown in credit growth is underway as banks have begun to tighten credit criteria. Nonetheless, Poland has maintained access to international capital markets,' it added.

The IMF said that Polish authorities had responded 'in a timely and effective manner' to the global downturn.

Poland last sought IMF help through a stand-by loan arrangement that expired in March 1996.

Poland's finance ministry has estimated the country's economic growth in 2009 to be between 0.3-2% but the European Commission predicted the Polish economy will shrink by 1.4% this year.

The European Commission had previously forecast 2% growth for the largest 2004 EU entrant.