Yesterday , the IMF's Executive Board announced its approval of a one-year $20.58 billion Precautionary Credit Line Arrangement for Poland, under its Flexible Credit Line (FCL). Poland is the second IMF member country, after Mexico, to be granted a line of credit under the FCL. TheFLC is a new credit line, that was announced in March, under which the IMF will “provide large and upfront financing to members with very strong fundamentals and policies,” in addition to longer-term repayment terms ranging from 3¼ to 5 years and unrestricted renewals.
Last month, Poland’s Prime Minister Donald Tusk announced in Warsaw that the country would be seeking aid under the IMF’s new FCL. The Polish authorities have indicated, however, that they do not intend to draw upon the IMF line of credit, and will treat the aid as strictly precautionary. Poland’s economic growth over the last decade “has been very strong and well-balanced." The country's financial economy has also been strengthened as a result of its membership in the European Union and adoption of the euro which has provided a “strong fiscal anchor” for the economy. John Lipsky, First Deputy Managing Director and Acting Chair, noted that the Executive Board determined that “a precautionary arrangement under the Flexible Credit Line (FCL) for Poland would play an important role in supporting the authorities’ policy response, boosting market confidence, and placing Poland in a better position to manage adverse developments.” He also stated that, despite the adoption of timely fiscal and monetary policies designed to curb the effects of the economic downturn, “Poland’s economy is now facing the risk of spillovers from the global crisis through both the real and financial sector channels downturn.”
Poul Thomsen, the IMF’s mission chief for Poland, also remarked, in an IMF survey, that the IMF agreed with the view of the Polish authorities that “the FCL will help preserve its access to capital markets, by signaling the IMF’s strong endorsement of policies and by providing assurances that the national bank has adequate reserves to intervene if the situation gets worse than expected.”