Poland to Loan $8 Billion to the IMF to Rescue the Euro


By Paweł Piotr Styrna l May 7, 2012

NBP Director Marek Belka         IMF Euro Permanent Bailout Fund


On April 19, the director of Poland’s central bank (National Bank of Poland, or NBP), Marek Belka, announced that Poland will loan $8 billion (6.27 billion Euros) from the bank’s currency reserves to the International Monetary Fund (IMF) to bail out the Eurozone. The contribution was a response to an IMF appeal, issued by director Christine Lagarde of France, to raise money for a $600-billion-dollar emergency fund to rescue the Euro. While the United States refused to participate, Japan provided $60 billion, and Norway and Sweden $10 billion each. The Polish contribution is thus only about twenty percent smaller than the one made by either of the wealthier Scandinavian countries which, needless to say, are in a much better financial position to afford such altruism. In addition, the interest rate charged by the National Bank of Poland on the loan is a generously low 0.5 percent. The decision confirmed an earlier commitment undertaken by the liberal post-communist coalition government of Prime Minister Donald Tusk.

Belka, a post-communist, reassured all and sundry that a “loan from our reserves does not threaten our country’s financial stability. The current strength of Poland’s economy can sustain it.” Not everyone is so certain, however.

Janusz Szewczak – chief economist for Poland’s SKOK credit union – refused to mince words: “Director Belka played the role of Santa Claus, even though it is now April. It is not an April Fool’s joke. According to the caste of liberal demagogues ruling us, Poland is a country as wealthy as Sweden or Norway. (…) Belka decided to loan the IMF as much as eight percent of our currency reserves. This is a huge amount (…). In Poland there are insufficient funds for cancer medication, schools are being closed, and we also don’t have money to pay for highway construction. Meanwhile, it turns out that we have an overabundance of cash and great generosity. We have chosen to diminish our own reserves to rescue bankrupt Europeans: the Greeks, Spaniards, Italians, and perhaps also the Portuguese. But those countries cannot be saved. Countries like Spain or Portugal will, sooner or later, share the fate of Greece.”

Is such harsh criticism baseless?

Well, it is certainly true that Poland has made great economic progress since the shattering of the Soviet communist shackles over two decades ago. Nevertheless, she remains a country of quite modest means, even when compared to some of the poorer EU members, which never experienced communist occupation and subjugation. The Second World War destroyed Poland’s economy, while communist rule stunted and retarded its development. Post-communist pathologies (such as corruption and ex-apparatchik patronage networks) and structural problems stemming from a socialist-statist economic model continue to hold the country back socially, economically and politically. Hence, not surprisingly, many Poles – particularly the young – have sought to escape unemployment, low wages, and high prices by migrating en masse to such EU countries as the UK or Ireland. In spite of the fact that the forces of the post-communist liberal status quo in Poland – especially the current government – have consistently portrayed the country as an island of growth in a sea of recession, the Polish economy is nevertheless showing signs of stagnation. Belka’s stated desire to raise interest rates to motivate foreign capital to continue to finance Poland’s own rapidly growing debt will likely only exacerbate the trend of slowing economic growth.

The Polish government’s generosity to the IMF and EU may also seem quite puzzling to many Poles in light of the Tusk cabinet’s push to raise the retirement age. The government has sought to legitimize this austerity measure by invoking the country’s financial problems, while ignoring the impact of Poland’s falling birth rate on the retirement system’s long term viability.

It appears, therefore, that the motivations of Warsaw’s decision to loan the IMF $8 billion were neither altruism nor an embarrassment of riches. Marek Belka’s telling statement that it was “a political [author’s emphasis] decision made by the government and confirmed by the central bank” indicates that the current Polish leadership’s drive toward “more Europe” – to use Donald Tusk’s own words – transcends mere lip service. The Civic Platform – Polish Peasant Party (PO-PSL) coalition government has thereby demonstrated its dedication to the ideological causes of Euro-federalism (“united Europe”) and internationalism (“multilateralism”). Hence, criticism of the loan will no doubt be cast as a dangerous flirtation with “nationalism” and “isolationism,” when, in fact, this loan should be viewed as the unharnessed forward lurch toward greater globalization that will ultimately plunge Poland into a financial and economic morass.

The defenders of the move may claim that the loan was necessary due to “global interdependence,” a truism, which seems to buttress almost every argument in favor of more global governance. After all, the global economy is, in many ways, a system of interconnected vessels. Accordingly, the collapse of the Euro would precipitate a global crash, which would inexorably spill over into Poland as well. The problem with this argument, however, is that the bailouts – even if coupled with expenditure and deficit trimming “austerity” measures, which are, in fact, not as austere as may be necessary – amount to an attempt to repair a collapsing structure by mere tinkering.

Furthermore, the question arises: Is the system even redeemable?

The current global crisis is a grim statement on the bankruptcy of an international economic arrangement built upon deficit spending by governments and the inflation of the money supply by central banks, both of which are ultimately unsustainable. Unless this system is completely overhauled, costly bailouts will only delay the inevitable crash, which will come upon the nation with great force once the temporary effects of the bailouts wear off and, in this particular case, subject the Polish people to even greater economic pain, with a much less promising future.

Paweł Styrna has an MA in modern European history from the University of Illinois, and is currently working on an MA in international affairs at the Institute of World Politics in Washington, DC, where he is a research assistant to the Kościuszko Chair of Polish Studies. Mr. Styrna is also a Eurasia analyst for the Selous Foundation for Public Policy Research and a contributor to

SFPPR News & Analysis.