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IMF allocates $30 bln credit to Poland

24 January 2011 09:51 (UTC +04:00)

Baku - APA-Economics. The International Monetary Fund on Friday offered Poland a new two-year credit line worth about $30 billion, citing potential risks from financial woes in other parts of Europe, AFP reported.

The IMF said its executive board approved the deal Friday as part of a lending tool created in 2009 to help countries weather the global financial and economic crises.

Poland was the only European Union country to avoid a recession in 2009, and the government has committed to economic policies that preserve macroeconomic stability, the IMF said in a statement.

"However, sizable downside risks remain, particularly from the possibility of further spillovers of financial turbulence in other parts of Europe," John Lipsky, the first deputy managing director of the fund, said in the statement.

The IMF said its board had agreed to the Polish authorities’ request to revamp a prior one-year arrangement approved in July 2010 for roughly $20.4 billion.

"The Polish authorities have stated that they intend to treat the arrangement as precautionary and do not intend to draw on the FCL," the IMF said referring to the Flexible Credit Line.

Poland first took a FCL in 2009 amid the global crisis.

The Polish economy is thought to have grown roughly four percent in 2010, and is expected to remain around that level this year.

With the economy posting solid expansion, the central bank on Wednesday became one of the few in Europe to raise interest rates.

The central bank raised its key interest rate for the first time in 18 months, by a quarter point to 3.75 percent, to combat inflationary pressures.

The IMF set up the FLC for countries with strong fundamentals and track records as a backstop to help reassure investors and provide ready cash in case of crisis.

The credit line can be drawn on at any time. Under lending tool reforms adopted last August, the IMF doubled the duration of the FCL, to up to two years, and increased the credit available.