Prague, 10 September 1998 (RFE/RL) -- Poland moved yesterday to ease its monetary arrangements despite the continuing economic crisis in Russia, highlighting the separation Warsaw has managed to achieve from Moscow.
Speaking with journalists in Warsaw after the conclusion of a meeting bringing together government officials and economic experts, Deputy Prime Minister Leszek Balcerowicz said that "Poland is already outside of the post-Soviet economic area. Irrespectively of the depth of the crisis in Russia, there will be no domino effect in Poland."
Balcerowicz said that exports to Russia are relatively small, around 8 percent of Poland's total exports -- or some 10 percent if unregulated cross-border trade is taken into account -- and seem certain to decline in the months to come. Even so, Balcerowicz warned that the Russia crisis may affect Poland's rate of growth next year and emphasized that to minimize this, the government could be forced to cut spending. Poland's GDP (Gross Domestic Product) has been rising this year by about six percent and is expected to exceed five percent in 1999.
Poland's Monetary Policy Council yesterday announced a cut in the 28-day money interest rate by one percentage point (to 18 percent from the previous 19 percent). The council also reduced the official monthly crawling devaluation rate of the zloty (to 0,5 percent from 0,65 percent).
The immediate economic effect of these moves is likely to be relatively minor. Its significance lies in the psychological impact on the public and the market in the situation in which the crisis in Russia appears to influence both domestic and international investors. The council's decisions demonstrate that Poland's economy remains free of Russian difficulties.
Indeed, the fundamentals of Poland's economy appear quite solid. The zloty closed yesterday above (by 3,57 percent) the parity rate set on a daily basis by the Central Bank against a basket of five western currencies. This marked a rebound from the low of one percent below the parity at the height of the Russian financial crisis at the end of August. And it means that foreign investors are returning to Poland's financial market.
Prices fell for the second consecutive month in August, suggesting that the government's goal of cutting annual inflation to below 10 percent at the end of the year is well in reach.