Books on Poland
% of GDP
Poland regained its independence in 1918 only to be overrun by Germany and the Soviet Union in World War II. It became a Soviet satellite country following the war, but one that was comparatively tolerant and progressive. Labour turmoil in 1980 led to the formation of the independent trade union "Solidarity" that over time became a political force and by 1990 had swept parliamentary elections and the presidency. A "shock therapy" program during the early 1990s enabled the country to transform its economy into one of the most robust in Central Europe, boosting hopes for acceptance to the
EU. Poland joined the NATO alliance in 1999.
Update No: 087 - (27/07/04)
Marek Belka was confirmed as Poland's new prime minister on July 14th in a parliamentary confidence vote. Belka's confirmation as premier ended almost seven weeks of wrangling since his predecessor Leszek Miller stepped down on May 2, the day after Poland joined the European Union.
Belka failed to secure the support of parliament in another vote in June. Had he again failed on July 14th, Polish President Aleksander Kwasniewski would have been constitutionally bound to call new elections for August.
Belka won the vote by 236 votes to 215. His victory had been widely predicted after he secured last minute support from the SDPL party. SDPL however has made it clear that it wants new parliamentary elections before the end of the year. Belka is a former finance minister and prior to his bid for the premiership he served as a top economic advisor to the U.S.-led administration in Iraq.
It is perhaps propitious that the matter was settled on Bastille Day, July 14th. The Poles are generally great Francophiles, and indeed Francophones.
Problems for the government
The newly-sanctioned government of Belka suffered its first series of shake-ups as word came of two departures from the Cabinet.
Finance Minister Andrzej Raczko will step down to take a position with the International Monetary Fund (IMF) and newly appointed Health Minister Marian Czakanski resigned unexpectedly from his post. Belka's Cabinet won a confidence vote in June after former Prime Minister Leszek Miller stepped down in May amid record-low voter support.
The chief economist of Millennium Bank, Miroslaw Gronicki, is pegged to take the seat. Gronicki is moderately well known to markets, having been amongst leading commentators on recent economic developments.
Poland's zloty reacted to the news as might be expected, losing ground for much of the session. But the reaction was short-lived and the zloty recovered a fair amount of lost ground late in the session.
"Actually is was clear to everyone in the market that the key policy maker in economic policy is [Economy and Labor Minister Jerzy] Hausner, while Raczko is of secondary importance," the chief economist of Societe Generale's Warsaw office, Marcin Mroz, said of the market reaction.
Eyes now rest very uneasily on Hausner as the foundation of the new government's fiscal and economic policy. Rumours have arisen repeatedly that Hausner is on the way out as the series of fiscal reforms he authored, known as the Hausner Plan, are failing to gain traction in a fractional Parliament.
A key vote Friday on pension and disability payment valorisation schemes will now loom large as an indicator of the fate of the Hausner Plan and of its author. A parliamentary commission reviewing the bill Thursday watered the bill down, agencies report, forcing benefits revision whenever inflation reaches 3%, not the 5% proposed by the government. Both versions will be voted on Friday.
"Hausner is becoming more of a stranger in this government," Mroz said. "But ultimately names are just names and we have to wait to see next year's budget bill to judge the fiscal intentions of this cabinet."
Poland has long had troubles effectively filling the finance post. In the current parliamentary term, Marek Belka took the post first, set a fiscal plan, but was upended nine months later as elements of his party pushed for Grzegorz Kolodko. Kolodko pushed his own fiscal views, but also failed to last a full year and stepped down as Labor Minister Hausner's star began to rise. Raczko gladly played second fiddle to Hausner and managed to survive just over one year on the job.
Gronicki will be Poland's fourteenth Finance Minister since Poland ditched communism in late 1989.
Gronicki has been the chief economist at Millennium Bank (previously BIG Bank Gdanski) since 2000. He is a 1972 graduate of Gdansk University, where he received a doctorate in 1977. He has worked at the University of Philadelphia in the United States and Charles University in Prague, Czech Republic. He has been en employee of the World Bank, the United Nations and the European Union.
The replacement at the Health Ministry will be Marek Balicki. Balicki is a doctor who earned renown as director of a Warsaw hospital, made a failed run for the Warsaw mayor's office and was appointed Health Minister by former Prime Minister Leszek Miller after Miller's first pick, Mariusz Lapinski, resigned amid scandal.
Balicki also resigned shortly after taking the post in protest over an appointment that Miller made to the leadership of the national health fund NFZ. The Miller appointee to the NFZ post was also later forced out in a scandal. Interestingly, Balicki's party, the social democrat SDPL, was not consulted about their colleague joining the government.
More European city destinations for Poles
Several major European low-fare air carriers, including Slovakia-based SkyEurope Airlines, Germanwings, Hungary-based Wizz Air and Poland's own Air Polonia, are scrambling to offer Poles more connections on established routes and new connections with more European cities in a battle for survival.
Slovakia-based SkyEurope Airlines, in operation since 2002, intends to become Poland's market leader and is introducing aggressive expansion moves to take full advantage of what SkyEurope officials regard as Poland's high development potential.
"Intensive development will make certain the success of SkyEurope Airlines strategy, fully supported by our investors, aimed at achieving the leading position on Poland's low-fare airline market," SkyEurope CEO, Alain Skowronek, said recently, Interfax News Agency reported.
To this end, SkyEurope, which currently just flies out of Warsaw's airport, is in talks to operate both domestic and international air transport services out of six other Polish airports, SkyEurope Press Spokesman, Eryk Klopotowski, said.
Sales of over 30,000 tickets on new flights to London, Paris and Amsterdam from June 14th support SkyEurope's optimistic expansion strategy for Poland, as does an average load-factor of over 80% on all flights in and out of the country.
SkyEurope commenced operations in Poland by offering flights to Budapest and Vienna-Bratislava from May 2nd. Inaugural flights to Rome and Milan are scheduled for October 8th, as is a doubling to two a day of flights to both London and Budapest from Warsaw during the winter season, Klopotowski added.
Italy is also in the sights of Air Polonia, Poland's first domestic low-fare airline, which took to the skies in December 2003.
Air Polonia's inaugural flight to Rome from Warsaw will be rapidly followed by Warsaw connections with Milan and Venice.
Air Polonia will work in partnership with Italian low-cost airline Volareweb.com on these routes. Air Polonia, together with rival Germanwings, initiated flights from a new facility at the Warsaw airport designed mainly for just such airlines.
Old terminal buildings were refurbished and renamed as the new Etuide terminal in March this year.
Germanwings, set up in 2002, initially offered flights to Cologne in March from Warsaw's Etuide terminal. Demand was so high that it has increased flights on this route by 50% and plans to also offer services to Cologne from Krakow, in Southwestern Poland. Germanwings also boasts a load-factor of some 80%.
Last on the scene so far this summer is Hungary-based Wizz Air, created in September 2003, which took to the skies just in May of this year. In answer to huge demand for flights to London from hordes of Poles searching for work abroad after Poland's May EU entry, Wizz Air intends to fly passengers to London and back from both Warsaw and the Polish port of Gdansk. These flights are scheduled to begin on August 10.
J&S Energy, the country's leading oil trading company, which recorded revenues of roughly US$5bn in 2003, wants to significantly increase its sales on the Polish market, Warsaw Business Journal reported recently.
The company is negotiating with Belarusian refinery Mozyr the terms of importing 600,000 tones of low-sulphur diesel oil per year to Poland. Annual sales of PKN Orlen last year amounted to 3.8m tons of this kind of oil, while Grupa Lotos had only slightly higher sales than the amount planned by J&S.
Poland will repeat sell-off prep for PKE, PGNiG
Poland will reopen its search for advisors on the privatisation of Polish energy concern PKE and gas monopolist PGNiG in time to allow for key sell-offs to proceed in the spring of 2005. "The tenders will have to be repeated and it will be done in time enough to make it possible to carry out initial public offerings in the spring of 2005," Poland's acting Minister of Treasury, Jacek Socha, said, Interfax News Agency reported.
Hopes that either of the firms could debut on Poland's capital market, and save Poland's 2004 privatisation receipts target along the way, were crushed once and for all recently, when the Treasury cancelled tenders to pick advisors for the sale.
Poland's planners are hoping to float minority stakes in the two firms on the Warsaw Stock Exchange. Prior to the tender cancellation, some officials were still pressing for a late 2004 debut for PGNiG, while even the most optimistic scenarios for PKE already pointed to mid-2005.
PGNiG was separately searching for its own advisor to help the company through the privatisation and perhaps orchestrate a sale of new shares either simultaneously or in a pre-IPO.
PGNiG is undergoing a sweeping restructuring process aimed at creating choice on the Polish gas market and building up PGNiG's profitability. In the first steps, six regional distribution firms were spun off at the beginning of 2003. A separate exploration and production firm is also to be spun off and a transmission system operator must be running on its own to meet an EU directive. PGNiG is to focus on its core activities of transmission, storage and gas wholesales.
PKE is Poland's biggest heat and power generator, producing some 2,300 MWt of heat and over 5,000 Mwe of electricity every year in eight main plants. In the Polish government's designs for the group, its electricity-generating capacity is to be increased to 7,000 Mwe. The group boosted its bottom line by 22.5% to 84.3m zlotys in 2003 from 68.8m zlotys in 2002 as restructuring processes began to bear fruit.
PKN Orlen injects 652m zlotys into investment pot
The shareholders of Poland's number one fuel concern, PKN Orlen, on June 24th earmarked 651.8m zlotys (US$173.3m), or just over 70% of last year's net profit, towards the whopping US$1bn the firm plans to spend on investment and takeovers by the end of 2005, Interfax News Agency reported.
Shareholders will take in dividend payments 278m zlotys, or most of the remaining 2003 net profit, which totalled 933.8m zlotys.
The decision was made on a postulate put forward by the Commercial Union open pension fund, a small Orlen shareholder. Orlen's management board had wanted to earmark more (698.82m zlotys) for investment and less (230.96m zlotys) for profit-sharing. The US$1bn that Orlen plans to spend by end-2005 on investment and takeovers includes an estimated 13.05bn Czech crowns (418m) to purchase a 63% stake in top Czech fuel firm Unipetrol. While Orlen's bid for Unipetrol has been accepted, the price can still be adjusted. The acquisition will strengthen Orlen's position as the leading Central and East European down-stream oil and petrochemicals player.
Orlen's investment plans also include the creation of a nationwide fuel logistics firm, in cooperation with Ukrainian firm Dewon to secure upstream operations in Ukraine, as well as development of its German subsidiary Orlen Deutschland, which currently holds 7% of the fuel retail market in northern Germany.
Orlen plans to boost its market share in the retail fuel sector in northern Germany to 12-15% within the next 10 years via the purchase of 200 fuel stations from global giants Royal Dutch/Shell and ConocoPhillips. Orlen bought the nearly 500-strong retail network in northern Germany in early 2003 from Britain's BP for 100.9m.
"We will take out loans to finance our expansion plans in Germany, but some of the cash must come from company coffers," Orlen Vice President Jacek Strzelecki told the shareholders' meeting recently.
Orlen accounts for some three quarters of Poland's oil refining, two thirds of fuel wholesaling and two fifths of fuel retailing. The company has about three quarters of its shares in free float, though the Polish state still has the final say with a total stake of 28%. That stake is to be cut in the future, though a date hasn't been specified.
French buy EC Wybrzeze shares
A consortium of dominant French power group Electricite de France (EDF) and top French gas company Gaz de France (GDF) increased its stake in Poland's EC Wybrzeze heat and power plant to 99.6%, when it bought 36.27% of the plant's shares for 56.3m, Interfax News Agency reported, citing the treasury in a statement recently.
"The option for the sale of this stake was included in the agreement signed between the treasury and EDF International and GDF International on June 2002 and amended with an annex on July 2003," the statement read. In mid 2000, the French consortium purchased a 45% stake in EC Wybrzeze for 62m. At the end of 2003, EDF held a 49.21% stake in the heat and power plant, while GDF held a 14.05% stake.
PGNiG nets 389m zlotys over Jan-April
Poland's gas monopolist PGNiG's net profit for the first 4 months of 2004 totalled 389m zlotys (84.923m), nearly 98% of the total expected for the year, PGNiG Vice President Jerzy Staniewski told reporters at a natural gas conference in Debe, northeast of Warsaw.
PGNiG confirmed its forecast of a 397m zlotys net profit in 2004, on an increase in gas sales of 1bn cubic metres to a total of nearly 13bn cubic metres.
The company expects gross profit to fall to 595m zlotys in 2004. For 2003, the company reported a net profit of 272m zlotys and a gross profit of 719m zlotys. "We estimate that net profit will be at 397m zlotys with a gross profit of 595m zlotys in 2004, and we estimate that our gas sales will increase from 1bn cubic metres to nearly 13bn cubic metres," Staniewski said, Interfax News Agency reported.
FOOD & DRINK
Louis Vuitton Moet-Hennesy Group
(LVMH) of France, which already owns 40% of Polmos Zyrardow, one of the largest vodka exporters in Poland, plans to buy another 30% stake in the company from Millenium Import LLC, Warsaw Business Journal reported recently.
American Millenium Import LLC currently holds 60% in the Polmos and it has already agreed to sell half of this stake to the French group, but the deal still needs to be approved by the Treasury Ministry.
FOREIGN ECONOMIC RELATIONS
Dutch, Polish ministers discuss EU-Russia relations
Foreign Minister, Wlodzimierz Cimoszewicz, discussed priorities of the Dutch presidency of the EU Council and EU financial prospects for the years 2007-13 during his visit to The Hague recently, PAP News Agency reported.
The Polish foreign minister met with his Dutch counterpart, Bernard Bot. Holland proposed to destine most of the EU reduced budget for the needs of the new member state, Cimoszewicz said after the meeting.
The two ministers also discussed EU-Russia relations as Poland wants to actively participate in shaping the eastern dimension of the EU policy and take part in the EU-Russia dialogue concerning energy, Cimoszewicz said. "I think the Dutch presidency may be deeply interested in Polish experience in this respect," he added.
The Polish and Dutch ministers discussed the accession of Bulgaria and Romania to the EU and commencement of membership negotiations with Turkey.
Cimoszewicz also met with the minister for development cooperation, Agnes van Ardenne, and former Dutch Prime Minister, Wim Kok. The latter now chairs the EU high-level group on the Lisbon Strategy, whose aim is to reduce economic disproportions between the EU market and that of the USA.
MINERALS & METALS
KGHM ups 2004 net target
Polish copper and silver giant KGHM will end 2004 with a net profit of 1.23bn zlotys and gross profit of 1.5bn zlotys, nearly double originally planned levels, and with revenues up over 11% to 5.768bn zlotys, the company said, New Europe reported recently.
High copper and silver prices finally prompted Polish non-ferrous concern KGHM to increase its production and financial forecasts for 2004. Such a move had been expected. Initial forecasts published in late January had suggested the company will take in a net 652m zlotys or a gross 805m zlotys, all on revenues at 5.17m zlotys. The company, the world's sixth largest copper and second largest silver producer, intends to increase copper output to 545,000 tonnes from an initial plan of 532,000 tonnes and increase electrolytic silver output from a planned 1,173 tonnes to 1,255 tonnes. Average copper prices for the year are now expected at US$2,438 per tonne, versus a prior calculation of US$2,000 per
PSE to restart Tel-Energo sell-off
Polish state-owned grid operator Polskie Sieci Elektroenergetyczne (PSE) will restart its search for an investor for Polish Tel-Energo, which offers telecom services and operators a cable network, at the start of 2004's fourth quarter, with March 2005 a possible deadline for the sale, PSE Vice President, Piotr Rutkowski,said, Interfax News Agency reported.
To strengthen its position before a sale, Tel-Energo has become the focal point as PSE consolidates its telecom assets. It was recently merged with Telbank, a PSA subsidiary that offered similar services, and later it received PSE's 50% stake in long-distance fixed line operator NOM for a total of 65%. A full merger of Tel-Energo and NOM would be possible once the third shareholder - fuel producer PKN Orlen, which holds a 35% stake in Tel-Energo, gives the transaction a green light.
Lockheed Martin signs SSN to build 4 ships by 2008
The US-based defence contractor Lockheed Martin signed up state-owned Polish ship builder Stocznia Szczecinska Nowa (SSN) to build four ships by 2008 as part of an offset deal concerning Poland's purchase of American F-16 fighter jets, the shipyard said in a statement on July 1st, New Europe reported recently.
In the first stage of the project, SSN is to build two container ships, valued at a total of US$80m, which are to be delivered in 2007. SSN and Lockheed are also beginning work on the second stage of the project, which includes the construction of two other ships in 2007 and 2008.
"The successful finalisation of this work scheduled to start in September 2004, will allow for full realisation of SSN's offset task," read the statement from the shipyard. Prior to the signing of the Lockheed deal, SSN had a total value of US$1.2bn in contracts, which were to secure its operations for three years.
The financially troubled SSN recently received a 25.9% stake in drug producer Jelfa in a government move to boost the shipyard's equity. The capital increase will be performed once the bankruptcy proceedings of Stocznia Szczecinska, the healthy assets of which were used to create SSN, are finalised and approved by a court.
Since its bankruptcy and the establishment of the new entity in 2002, the Szczecin shipyard, operating as SSN, has received loan guarantees from the treasury totalling 1.2bn zlotys. Currently, the treasury's involvement in SSN amounts to 823m zlotys, as the shipyard has already paid off some of its debt. Currently, SSN is 94%-owned by the state-run ARP and 6%-owned by the treasury ministry. American aeronautics giant Lockheed Martin has started or completed contracts worth some US$1.14bn, as part of an offset package tied to Poland's purchase of US$3.5bn of Lockheed's F-16 fighter jets. The Polish government's offset committee has accepted nine contracts worth US$517.9m, out of the US$1.14bn presented by Lockheed Martin by the end of April 2004. The remaining contracts are under review.
In June Lockheed redrew its list of investment projects, upping aggregate project value to US$9.86bn from initial plans of US$6.03bn. The defence contractor is obliged to sign US$3bn in offset-related contracts by 2006, another US$2bn must be signed before 2009 and the remaining US$1.03bn by 2013. The company is financially responsible for keeping the schedule. Lockheed tied down Central Europe's largest-ever military contract in the first half of 2003, edging out BAE Systems/Saab and France's Dassault. The offset deal is worth just over US$6bn.
Our analysts and
editorial staff have many years experience in analysing and reporting
events in these nations. This knowledge is available in the form of
geopolitical and/or economic country reports on any individual or grouping
of countries. Such reports may be bespoke to the specification of clients
or by access to one of our existing specialised reports.
For further information email: