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POLAND


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 209,563 187,670 176,300 24
         
GNI per capita
 US $ 5,270 4,570 4,230 71
Ranking is given out of 208 nations - (data from the World Bank)

Books on Poland

REPUBLICAN REFERENCE

Area (sq.km) 
312,685

Population 
38,626,349

Capital
Warsaw

Currency 
Zloty 

President 
Aleksander 
Kwasniewski 

Private sector 
% of GDP 
70%



Update No: 093 - (28/01/05)

Chequered, but colourful, political landscape
The Poles, despite many admirable qualities, are a turbulent, fissiparous and fractious people. In times gone-by they operated a crazy system of allowing just one member of the national assembly to exercise a veto over legislation. One bad apple could rot the rest. It is hardly surprising that the nation then lost its independence largely as a consequence. It was divided up by Russia, Prussia and Austria in the course of the three great Partitions of Poland in 1772-95.
Poland won a belated independence again in 1918. But in effect a fourth partition of Poland took place in 1939 between Nazi Germany and the USSR. Towards the end of nearly five decades of communism (which Stalin himself said fitted Poland as a saddle does a cow), the Poles staged a great revolt. A Polish pope elected in 1978 and the rise shortly afterwards of Solidarity, the trade union movement led by Lech Walesa, provoked the imposition of martial law in 1981. Stasis and stagnation once again.
But the Pope and Solidarity remained intact. Then came the emergence of Mikhail Gorbachev in Moscow in 1985. This happy conjuncture brought renewed independence in 1989. It is of course now highly cherished, although the Poles agreed to join the European Union (EU) last year, in principle a derogation of independence that ultimately safeguards it for good.
Solidarity proved better at fighting the communists than ruling itself. The pro-EU and pro-NATO Democratic Left Alliance (SLD) has governed Poland since crushing the Solidarity government in the September 2001 election. But the government, which lacks a majority, has suffered from complaints over unemployment, budget deficits and corruption. The country's unemployment rate was 18.4 per cent in November, the highest in the EU. 
Prime Minister Leszek Miller stepped down in May 2004 after Poland officially joined the EU. Miller had administered the government since 2001, but lost his majority after a split with the Peasants' Party (PSL) in March 2003. In March 2004, a year later a group of deputies bolted the SLD to form a new party, forcing the resignation of Miller on May 2nd. SLD member Marek Belka was appointed as acting prime minister by President Aleksander Kwasniewski.
Other main opposition parties are the free-marketeering Civic Platform, the Eurosceptic PSL, and on the far right Samoobrona (Selfdefence), the League of Polish Families, and the crime-bashing Law and Justice. 
If the SLD fails as a minority government, new elections could unsettle the political system. The next parliamentary election is tentatively scheduled for September.

Civic Platform is in first place in polls
Opinion polls indicate that a change of government is in the offing. The opposition Civic Platform (PO) is the top political party in Poland, according to a poll by PBS Sopot published in Rzeczpospolita. 25 per cent of respondents would vote for the PO-led by Donald Tusk-in the next general election.
The Law and Justice Party (PiS) and the Self-Defence of the Polish Republic (SRP) are tied for second place with 14 per cent, followed by the League of Polish Families (LPR) with 12 per cent.
The governing SLD is only fifth with 11 per cent, followed by the Peasant's Party (PSL) and the Labour Union (UP). 

Economy recovering
Poles, who were sceptical about the benefits of European Union membership, have seen their economy thrive since the country joined on May 1st 2004. Poland posted year-on-year GDP growth of 4.7 per cent in the year to November, the latest figure available.
According to analysts from American investment bank Merrill Lynch, Poland's ratings by international agencies will be heightened in 2005.
At the moment Poland has the lowest rating in credit credibility among main Central and Eastern European countries. However, the economic indicators are much better than country's ratings would indicate. Merrill Lynch suggests the three major agencies, Standard&Poor's, Moody's and Fitch Ratings, are bound to raise ratings during this year. 
Outside of Poland, Hungary enjoys high marks from agencies while its economy stands on risky ground, mainly because of a high budget deficit. Analysts claim that the unstable situation will continue throughout 2005 and Hungarians must expect lower rankings. Slovakia, as in Poland's case, was previously underestimated in ratings, which was corrected by Moody's. A similar correction is expected for Poland soon. 

The reflections of a past leader
Lech Walesa, former head of Solidarity and former president of Poland, visited the Institute of World Politics in September, where he gave a personal view of the implosion of the Soviet empire and an optimistic view of his country's future as a staunch American ally within a united Europe.
Reflecting on his days under communist military rule when, as a shipyard electrician, he led the Solidarity movement that organized and mobilized millions of Polish citizens in non-violent resistance, Walesa warned of danger from totalitarian Belarus, increasingly authoritarian Russia, and a corrupt and collapsing Ukraine (but this was before the Orange Revolution). 
Much work remains to be done, Walesa said to prevent those countries from falling into a permanent netherworld of neo-Soviet dictatorship. He predicted that Poland would play an increasingly important role in European and trans-Atlantic affairs. Poland, for example, currently has 2,350 soldiers in Iraq, the fourth largest contingent of the coalition after the United States, Britain and Italy. 

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ENERGY

Lotos clinches 340m zloty credit for retail development

Lotos Group, Poland's second largest refinery, signed a deal to borrow a total of 340m zlotys from Poland's two biggest banks, PKO BP and Pekao SA, to develop its retail network in southern Poland, Interfax reported recently. "According to the deal, Lotos Group will get 340m zlotys to realise its retail network development programme, which includes reaching at least a 12% share in fuel market by 2010 and enlarging the network to 500 gas stations," a statement released on December 17th said.
The two banks are splitting the loan equally. "Our share in the loan is equal and guarantees for the loan are good but they do not include the company's shares. This is a large and ambitious development project, which in our opinion is real," Pekao SA President Jan Krzysztof Bielecki said. "It is visible now that investment recovery is beginning in the Polish economy."
Poland's central bank said it expects investment to replace export as the main economic growth driver in Poland in 2005. Investments rose 4.1% year-on-year in the third quarter, up from the revised 3.6% in the second quarter. Analysts had expected investment growth to exceed 6%. Economists said a delay in the distribution of EU funds for small- and medium-sized enterprises, as well as tighter fiscal policy, both cut into investment. The loan marks top Polish retail bank PKO BP's efforts to work more with corporate clients.

Japan wants Polish energy

Some 23 Japanese energy and steel enterprises have formed a group of potential investors in energy production in Poland, according to Warsaw Business Journal recently. Businessmen from the land of the rising sun hope to produce renewable sources of energy in cooperation with Polish companies, most of them state-controlled. The cost of preliminary projects is estimated at US$140m (440m zlotys). Energy producer and distributor J-Power will fund windmill energy and the Mizuho Financial Group is in a joint venture with the National Sugar Company to produce energy from biomass.

PKN Orlen ready to offer more shares to investors

Nafta Polska President Krzysztof Zyndul recently announced that Poland is likely to commence a process to sell an additional stake in its leading fuel maker, PKN Orlen, in 2005, once the company prepares its development strategy and Poland prepares its energy security strategy.
The government agency is responsible for the privatisation and restructuring of Poland's fuel and chemical sectors. The government currently owns a 27.5% stake in PKN Orlen.
In 1999 and 2000, the government listed over 70% of the company's shares on the Warsaw Stock Exchange and in the form of global depositary receipts traded in London and New York.
Top Hungarian oil and gas concern MOL and Austria's biggest oil company OMV have both discussed with the Polish government on and off over the past several years about purchasing a stake in PKN Orlen. Orlen is also expected to finish its takeover of top Czech oil company Unipetrol in 2005.
"There is a chance to perform the third stage of PKN Orlen privatisation in 2005, but under several conditions," Zyndul said, Interfax News Agency reported.
He added, "These would include preparation of a national energy security strategy, as well as development strategy from the PKN Orlen itself."
PKN Orlen is expected to present the strategy sometime in January-February 2005 period. The Polish government was expected to discuss energy security strategy, due to include details on the government's control over the sector and its diversification, recently.
Zyndul said it would rather sell a stake in the country's biggest oil company to a strategic investor, rather than float another stake on the Warsaw Stock Exchange. The agency wants to link PKN Orlen to an investor, who would also participate in the search for the oil fields and their extraction. "It would be the best solution for an oil-field exploration partner to become the strategic investor for Orlen, but it's not obligatory," Zyndul added.
In 2004 Polish treasury Minister, Jacek socha, said that statute changes reducing the Treasury's shareholder privileges would have to precede further privatisation of PKN Orlen.

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FOREIGN DEBT

Poland wants to repay all of Paris Club debt

Poland plans to pay off up to 12.3bn euros it owes to the Paris Club creditors, the Ministry of Finance said recently, PAP News Agency reported
The actual scale of repayment is still not known: it hinges on the readiness of individual creditors to accept early repayment.
"The whole operation of early repayment will be financed from foreign bond issues staged gradually over the next 12 to 18 months," the ministry said. "Financing to the tune of 6bn euros has already been secured."
Poland's debt to the Paris Club now stands at 12.3bn euros. This year's planned instalment is 2.1bn euros.
The planned early repayment of the entire debt is meant to improve the public debt to GDP ratio and influence Poland's ratings, the ministry added.

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FOREIGN ECONOMIC COOPERATION

Libyan leader, Polish premier discuss cooperation

Prime Minister, Marek Belka, met the Libyan leader, Col Mu'ammar al-Qadhafi, recently. This was the first official visit at this level since 1985. The head of the Polish government conveyed to the Libyan leader a letter from President Alexsander Kwasniewski inviting him to Poland, Polish Radio 1 reported.
The meeting between the Polish prime minister and Mu'ammar Qadhafi lasted nearly an hour. The Libyan leader received a delegation at his residence of Bab al-Aziziyah. According to the prime minister's colleagues, the talks mainly concerned the return of Polish business to Libya. Col Qadhafi told Polish journalists after the meeting that there were great prospects for cooperation between the countries. He emphasised that at one time the contacts had been very close. He added that now they could renew them. 

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TELECOMMUNICATIONS

Netia teams up with Dialog

Poland's telecom incumbent TPSA, controlled by France telecom, will face tougher competition from operators Netia and Dialog, which both plan to join Swedish Tele2's Polish unit in offering a local-call to TSPA's clients, Interfax News Agency reported.
"We are currently negotiating an annex to our deal with TSPA to extend our prefix functionality," Netia spokesperson, Jolanta Ciesielska, said recently.
"The service will be likely launched in the first half of 2005." Dialog has similar plans, and also hopes to launch the new service in 2005, the company's spokesperson, marta Pietranik, said. The Polish unit of Tele2 launched the service on December 3rd 2004.

TPSA predicts 2% revenue growth

Dominant Polish telecom TPSA, controlled by France Telecom, maintained its forecast of 2% year-on-year revenue growth for 2004, TPSA president, Marek Jozefiak, said recently, Interfax News Agency reported.
"We maintain our view that the 2% growth year-on-year is very, very ambitious, but we want to achieve it," Jozefiak said. In October TSPA said it planned to grow 2004 revenue 2-3% year-on-year, aiming for 18.65-18.84bn zlotys in full-year sales. After the second quarter, the company decreased its guidance from 3-5% revenue growth. TSPA outperformed market expectations as third-quarter revenue, pushed by data-transmission and mobile operations, bolstered the company's net profit. The company increased consolidated revenue by 2.5% year-on-year in the third quarter to 4.678bn zlotys, while nine-month revenue increased by 1.86% to 13.88bn zlotys. Third-quarter net profit rose 33.9% year-on-year, boosted by the sale of a stake in French satellite operator Eutelsat, to 596m zlotys, beating most analyst expectations, which had ranged from 420 to 719m zlotys.

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