Poland Point

Poland will launch a 91.3 billion-zloty ($30.1 billion) anti-crisis plan to defend the economy against the global financial crisis, which forced it to cut the 2009 economic growth forecast to 3.7 percent from 4.8 percent.

The government adopted the plan for stabilizing the economy and public finances between 2009 and 2010, Prime Minister Donald Tusk told a news conference in Warsaw today.

Poland, the largest economy among the European Union’s eastern members, has seen growth prospects dim as its trading partners in the bloc, the destination for more than two-thirds of the country’s exports, slide toward recession, while the global turmoil is scaring investors away from riskier assets in emerging European markets.

“These decisions are aimed at fighting the effects of the crisis and will not hurt the stability of public finances, as well as Poland’s credibility, as the country is not in a bad situation in spite of the crisis,” Tusk said.

The Poles are looking to avoid a growing lineup of emerging market economies that have drawn more than $40 billion from international organizations to survive the crisis. Hungary, Ukraine, Iceland, Serbia and Pakistan have all been granted bailouts while Latvia, Belarus, and Turkey are in talks on rescue packages.

Bank Guarantees

The plan includes 40 billion zloty to raise the limit for bank guarantees next year. To offset the effects, Poland will also raise excise tax on alcohol and imported cars to collect money for increasing social aid.

The cabinet also agreed to raise capital at state-owned lender Bank Gospodarstwa Krajowego by 2 billion zloty to enable the bank to lend about 20 billion zloty to domestic companies next year. Some 16.8 billion zloty in investments financed with European Union funds will be sped up to help stimulate the economy, and plans to apply to the European Commission for the early transfer of 3 billion zloty, Tusk said.

Gross domestic product in the 15 nations that share the euro shrank 0.2 percent for the second consecutive quarter in the three months through September. Germany, Ireland and Italy are suffering a recession, while Spain’s economy contracted for the first time in 15 years and the Netherlands and Portugal stagnated.

Slowing Growth

Polish economic growth may slow to about 5 percent this year and 2.8 percent next from 6.7 percent in 2007, according to the National Bank of Poland’s estimates.

The cabinet will also speed up telecommunication investments and ease regulations to encourage private investments in the coming two years, Tusk said. The government is also considering temporary guarantees for all banks operating in Poland.

To keep energy prices from jumping, the government wants the energy market watchdog to set a maximum price for electricity.

The global slowdown prompted the Cabinet to revise the 2009 economic growth forecast. On Dec. 2, it will adopt the amendment to next year’s budget plan, Finance Minister Jacek Rostowski said at the same press conference today.

“This forecast is realistic,” said Rostowski. “Poland is not an isolated island so it is likely to be affected by the global crisis but we still remain moderately optimistic.”

The forecast revision is part of the budget plan, which assumes a deficit of 18.2 billion zloty. To keep the shortfall at that level, the government will lower next year’s spending by 1.71 billion zloty.

Source:Bloomberg.com

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