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Poland: The Zloty -- Soon To Be 'Made In Poland'?

Warsaw, 13 January 1997 (RFE/RL) -- Poland has a new dilemma: Can it afford to print its own money?

The zloty notes currently being issued by the National Bank of Poland are in fact "British" zloty, insofar as they are made in England by a specialized currency printer named Thomas de la Rue & Co.

That company won a contract in 1994 to produce the "new zloty," which shaves four zeroes off the denominations of the old zloty.

The new zloty became sole legal tender in Poland from January 1, so notes with face values of tens or hundreds of zloty now fully replace the old zloty, with their denominations in tens of thousands or even millions.

Such a re-denomination improves the image of a national currency by providing an air of solidity, and in practical terms greatly simplifies financial transactions and calculations, as well as accounting.

With the final phasing out of the old notes, National Bank President Hanna Gronkiewicz-Waltz announced that the zloty will soon be printed in its homeland. This move appealed to national pride, but subsequently led to controversy because a homegrown zloty note is going to be a deal more expensive than the foreign variety.

Gronkiewicz acknowledged the Polish-printed notes will cost "much" more, and she called this disturbing. But she indicated the move will go ahead in the first quarter of this year. According to Polish press reports, notes will cost 57 percent more if printed by the currency section of the Polish Government Printing Office.

This brought a cry of concern from the Director of Public Contracts, Jozef Suk, who said he was "taken aback" by Gronkiewicz-Waltz's remarks. Suk said he had never been told about the cost difference of the local printing.

An RFE/RL correspondent in Warsaw reports that the formal basis for Suk's concern is a government act from 1994 which says that government can only place an order with a Polish company if the cost of production of the item does not exceed by 20 percent the cost of ordering it from a foreign firm.

The deputy to Gronkiewicz-Waltz, Witold Kozinski, said the Zloty printing offer made by the PWPW subsidiary is not acceptable, as it far exceeds the British offer. He said the National Bank and the PWPW are facing tough negotiations, and he said the printers know they are dealing from the position of monopolists.

Complicating the situation is the state of the PWPW itself. Our correspondent says it is on the verge of financial collapse, and it need the zloty order if it is to stay afloat. The gradual phasing out of the old zloty notes which it used to print, has meant that its income has dwindled away.

Sources close to the PWPW say it has invested heavily in the complicated printing machines needed to do modern high-quality currency printing, and the equipment is lying idle.

PWPW president Marek Burski says assets will soon have to be sold if the currency job does not come to his company.

Well, that's the problem: even the people who make the money are short of money.