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Key Economic Data 
  2002 2001 2000 Ranking(2002)
Millions of US $ 187,670 176,300 157,600 22
GNI per capita
 US $ 4,570 4,230 4,170 71
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 092 - (01/01/05)

Belka Wins Parliamentary Vote of Confidence
Poland is still tenuously in the hands of the Left. Prime Minister Marek Belka of the Democratic Left Alliance, who became premier in May, has finally won the parliamentary vote of confidence he needed in order for his government to rule. The outcome of the vote was 236 votes for 215 against with one abstention, which was pretty close to what pundits had predicted. Just like in the previous confidence vote, the Democratic Left Alliance (SLD), the Labor Union (UP) and the majority of independent deputies supported Belka's government. 
As expected, right-wing parties such as the Civic Platform (PO), Law and Justice (PiS), Polish Family League (LPR), Polish Peasants Party (PSL) and Self-Defense were against Belka. 
In the debate prior to the vote, Jaroslaw Kaczynski (PiS) addressed Sejm deputies and denounced Belka's government as a continuation of post communism, while PO's Zyta Gilowska said that Belka's success was a continuation of Miller's success, referring to the previous premier. 
The government only won thanks to the votes of the Federated Parliamentary Club (FKP) and Polish Social Democracy (SDPL), whose deputies agreed to back Belka after last day negotiations. 
Before the vote took place, Belka presented his new plan, which differed from the previous one only in terms of the concessions he made in order to secure the SDPL's support. He promised to build a fair state and ensure a citizen-friendly foreign policy. 

Firm on reform
After the vote Belka said that he will do anything to ensure that his government operates until spring next year. Belka stays firm on reforms.
Indeed Belka has pledged to press ahead with fiscal reforms designed to cut public debt. Belka said that Economy Minister Jerzy Hausner, who had threatened to quit if reforms were not implemented, had his full backing and would continue to oversee the reforms.
Belka has called for an acceleration of the country's privatization process. Belka has stated that the remaining state assets should be sold off through the country's stock exchange.
Belka is a former finance minister and prior to taking the premiership was the chief economic advisor to the U.S. administration in Iraq.

The EU is the key
Poland will meet key criteria for stable long-term interest rate and inflation levels of the Maastricht Treaty in the next 12-20 months, allowing the country to then begin adoption of the European common currency, Dariusz Filar, a member of the National Bank of Poland's rate-setting Monetary Policy Council (RPP), was quoted as saying by Interfax on November 25th.
"I think that these two criteria will be fulfilled within the next 12 to 20 months," he said speaking at an Oracle corporation conference on Polish Euro adoption in Warsaw. "Poland already has stable rates on its benchmark 10-year bonds and inflation is back on a lowering trend towards 2.5% over the 12-20 months, so we are moving towards meeting both these goals. This will be very evident by the second half of 2005." The Maastricht Treaty requires long-term interest rate stabilisation. Bench-mark 10-year bonds yields cannot be more than 2 percentage points higher than the average 10-year bond rates in the three EU countries with the lowest inflation. In 2003 this rate was 6.4%. Poland's 10-year bond yields are hovering around 6.36%. Another Euro entry criterion is long-term price stabilisation.
The consumer price index (CPI) must grow no more than 1.5 percentage points faster than the average rate in the three EU countries with the lowest inflation. This rate was 2.6% in 2003. The Polish government, the central bank and the International Monetary Fund have all stated publicly recently that Poland's end-2005 inflation rate, of which CPI is the primary component, will be at 2.5%, which Filar again confirmed.
In October Poland's consumer prices rose a faster-than-expected 4.5% year-on-year, after having risen 4.4% in September.
In addition, Euro adoption requires a stable, freely trading currency. Before full adoption, Poland will enter the Exchange Rate Mechanism 2 (ERM2), which requires Euro candidates to have a freely traded currency that rises no more than 15% above a rate set against the Euro and no less than 2.5% below for 2 years, barring any special circumstances.
"The Polish currency is appreciating, and will likely continue to do so for now," Filar said. "Poland is the only 'free-flow' currency in the region, so stabilisation will be difficult and negotiating the rate at which we convert the zloty into the Euro will be a difficult negotiation."
By free-flow, Filar was referring to the fact that the Polish currency's level is fully determined by market forces. All other new EU accession countries have currency levels artificially regulated in one way or another. The treaty also requires that the public finance debt not be more than 3% of the candidate country's gross domestic product (GDP).

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First Polish-made plane leaves for USA

The first Skytruck plane produced as part of the offset deal accompanying the F-16 supply contract for the Polish air force by PZL Mielec left for the USA on November 25th. The Mielec-based aircraft plant will produce a total of 100 Skytruck planes for the USA within eight years, PAP News Agency reported.
PZL Mielec CEO, Zbigniew Dzialowski, did not disclose how much one Skytruck machine costs. Next year PZL Mielec will produce four to nine Skytruck planes for the United States.

New carrier takes off, but will it fly?

It is aiming for budget travellers who are storming airports throughout the country, but the competition is heavy reported Warsaw Business Journal recently.
Details of the new service, which has been given the operating title Nowy Przewoznik (New Carrier), were unveiled just days before Europe's biggest budget airline easyJet launched its new London-Warsaw route. EasyJet, with an impressive annual revenue of £52m in 2003, is potentially the new Polish flyer's strongest competitor.
Nowy Przewoznik will run charter flights previously managed by LOT Charters and offer regular timetable routes from the first quarter of 2005. An internet booking system will soon be available to customers.
Over this year Nowy Przewoznik hopes to carry 800,000 passengers using five Boeing 737s. Achieving this target, however, will require spectacular growth because the total passenger figure for all budget airlines in 2004 is estimated at around 1.2m. Undeterred, the company's newly appointed president Piotr Kociolek asserts: "In a young and developing market like ours, capturing such a significant share is not a daydream."
Airport traffic in Poland increased by 23% in the first three quarters of last year compared to the same period a year ago. Some regional hubs reported even higher numbers: Katowice airport doubled its number of passengers, to almost half a million until September last year. Poles, who earlier would not consider flying because of high costs, are now switching from buses to aeroplanes on their way to other European cities.
Although a new player in the market always causes a stir, the well established low-cost carriers seem confident of their position.
"Traditional carriers have many times in the past tried to set up a low cost carrier without much success," says marketing manager for the CEE region at easyJet Yannis Capodistrias, citing British Airways, KLM and SAS as examples.
While doubting the possibility of Nowy Przewoznik's success, Capodistrias welcomes new competition.
In Nowy Przewoznik's favour, it brings with it qualities other budget carriers lack: confidence and trust in its parent company among travellers. "In the airline business, the customers' sense of security decides the customer's choice," underlines Kociolek.

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BPH more than doubles net profit in Q1-Q3

Poland's third largest bank, BPH, part of the German HVB group, increased its net profit by 2.5 times year-on-year to 165.4m zlotys in the third quarter of 2004 as it boosted revenues and cut costs, the bank said, Interfax News Agency reported.
Analysts had expected the bank's July-September net profit to range between 151m zlotys and 173m zlotys. The nine-month net profit totalled 589.4m zlotys, also more than double the 271.3m zlotys it posted for the first nine months of 2003.
"We have continued a positive trend in the third quarter, and finished another period with very good financial results," BPH President, Jozef Wancer, said. "We have managed to increase the revenues from banking operations and at the same time decreased operating costs for the bank."
The bank hiked its interest income by 9.1 per cent year-on-year to 649.5m zlotys, with the nine-month result up by 2.8 per cent, on the back of increasing interest rates and growth in the retail segment. The bank saw a 16 per cent year-on-year increase of revenues in the consumer segment in the first three-quarters of 2004 driven by an increase in lending, mainly Swiss-franc-denominated mortgage loans, but also due to a higher number of deposits.

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Polish European Committee discusses Lisbon Strategy, EU budget

The European Integration Committee (KIE) met recently to discuss the so called Lisbon Strategy, EU budget for 2007-13 and the National Development Plan, PAP News Agency reported. 
According to initial estimates some 110bn euros has been assigned from the EU budget for Poland's modernization projects. This is the sum which should be used in coming years to accelerate economic development, said Prime Minister, Marek Belka, who chaired the debate. 
The minister for European affairs, Jaroslaw Pietras, said that the National Development Plan was still being discussed so there was time for possible changes. The plan's main priority for 2007-13 has been to maintain the high tempo of economic growth through repairing public finances and seizing opportunities created by the EU. 
The minister said that a meeting of representatives of 13 EU states, friends of EU cohesion policy, will take place in Warsaw in the near future.

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PKN Orlen reports bigger net profit in July-September

Poland's leading fuel group, PKN Orlen, probably doubled or nearly tripled its bottom line in the third-quarter of 2004, thanks to high refining margins and a rising Ural/Brent price differential, analysts said. Five analysts polled point of rising oil prices, a strong zloty and Orlen's cost-cutting programme as the main factors boosting its results in the July-September period. Their estimates place the company's net profit at between 491 and 720 million zlotys in the third quarter of 2004 from 253 million zlotys in the same period of the prior year, and sales revenues of between 8.1 and 11.1 billion zlotys, up from 6.6 billion zlotys in the same period of the prior year.
"The refining margins, although lower than in the second quarter were still high. The Ural/Brent differential was rising and the company should get an additional 80 million zlotys from its ongoing cost-cutting programme. Plus, rising oil prices influenced the valuation of inventories, while the strong zloty against the dollar and the Euro impacted on the valuation of the company's liabilities denominated in these currencies," PKO BP brokerage house analyst, Sebastian Slomka, said, Interfax News Agency reported.
In the second quarter, refining margins increased by 138 per cent year-on-year to US$5.84 per barrel, as crude prices increased by 35.7 per cent on average.
The company also gained as the Ural/Brent price differential grew to US$3.12 a barrel in 2004s second quarter from US$2.05 per barrel in 2003s second quarter.

Polish oil firm may increase investments in Germany

Orlen Deutschland, the PKN Orlen daughter company, does not rule out the possibility of increasing investments in Germany. An investment plan is to be approved by the end of January 2005, Orlen Deutschland Deputy Chief Executive Officer, Michal Jonczynski, said, PAP News Agency reported.
"We've got a new supervisory board that will learn about proposals of the board and will decide about the final shape of the investment programme," Jonczynski told reporters.
He added Orlen Deutschland may control a bigger part of the German market than has been envisaged. Plans were for the company to invest 35m euro in 2005 and acquire 30-40 new petrol stations.
Under the plan, by 2007 Orlen Deutschland is to dominate 10 per cent of the market in northern Germany which will give it control over 2.6 per cent of the entire German market. At present, Orlen Deutschland controls 7 per cent of the northern Germany market and 2.3 per cent of the entire German market.
To implement the plan, Orlen Deutschland would have to add 100 new petrol stations to the 485 it owns at present.
Jonczynski refused to comment on the year-end financial result of Orlen Deutschland. After three quarters of 2004, the net result was close to zero which was a result of huge outlays related with the change of the brand name on stations taken over by the Plock-based concern.

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Smithfield buys Morliny

Global giant Smithfield Foods purchased Morliny meat producers in Poland from Campofrio Alimentacion of Spain, giving the US-based company a 10 per cent stake in the Polish market, the newspaper, Rzeczpospolita, reported recently.
An official with Smithfield Foods' Polish branch, Grupa Animex, said that company purchased 99.36 per cent of Morliny for 181m zlotys (US$53.5m). Company employees and private cattle farmers hold the remaining 0.64 per cent. Morliny is the number 2 rated brand in Poland's thriving meat market. Grupa Animex owns the top seller, Krakus. Morliny employs 1,200 workers and had sales amounting to 375.4m zlotys last year. It reported a 7m zlotys profit for 2003.

Meaty profits

Meat processing company ZM Duda is not slowing down its pace of development, Warsaw Business Journal reported recently. 
Despite the fact that it is delaying the publication of its official forecasts for 2005, the firm should boost profits by over three quarters this year. "We are completing the collection of data from our subsidiaries and waiting for the end of the turmoil resulting from the privatisation of PKO BP which would make our information less visible," said Maciej Duda, managing director of the company. In 2004 the firm should post a profit of zl.24m, which would be 89% more than a year earlier. However, the result might be even better, as ZM Duda should soon consolidate the results of two newly acquired companies - Makton and Eurosmak. "There is large potential in the rest of the group. We can save a lot thanks to integration, especially on transport costs," said Maciej Duda.

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Warsaw, Delhi mull options

Poland and India will explore options aimed at intensifying trade in arms and cooperation in upgrading Indian military equipment, the Polish and Indian defence ministers were quoted as saying by Deutsche Presse-Agentur (dpa) on Novemebr 2nd in the Polish capital Warsaw, New Europe reported.
Following official talks with visiting Indian Minister of Defence, Pranab Mukherjee, Polish Defence Minister, Jerzy Szmajdzinski, announced the creation of a special joint Polish-Indian working committee focused on the modernisation of Indian-owned tanks, anti-aircraft and rocket systems and the sale of Polish radar equipment. Mukherjee said India was also interested in joint training exercises with NATO-member Poland as well as technology transfer. India has been a buyer of Polish arms since the early 1980s when Poland was still a communist country within the soviet sphere of influence.

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Drozapol-Profil to raise over 20m zlotys in IPO

Polish steel products distributor Drozapol-Profil aims to raise 20-32m zlotys in an initial public offering (IPO) to develop its sales network, finance takeovers and implement a new IT system, Drozapol-Profil President, Wojciech Rybka, said recently, Interfax News Agency reported.
The company plans to sell a 26.9 per cent stake made up of new and existing shares in the IPO, Rybka said.
In the IPO, Drozapol-Profil plans to sell up to 5.55m shares, of which 4.0m will be new shares. The company plans to offer 3.0m new shares and 1.55m old shares to large investors, 980,000 new shares to small investors, while the remaining 20,000 will be offered to the firm's employees.
In a separate transaction, it plans to sell 800,000 shares to boost the company's equity. 
"We intend to increase our sales, so we need funds for this development, as the recently recorded 25 per cent annual sales growth is possible with our current financial capabilities. We want to implement an IT system and we also plan to take over companies in the sector that are having problems operating in the current market situation," Rybka said.
The steel products distributor is in talks with three companies that it could take over this year.
Drozapol-Profil more than doubled its 2004 nine-month net profit to 12.5m zlotys from 5.2n zlotys in the analogous period of 2003, as sales revenues rose to 72m zlotys from 56.4m zlotys in the first nine months of 2003. The company recorded a 28m zlotys net profit in 2003 on 74.7m zlotys of sales revenues.

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PGF maintains 2004 forecasts

Poland's largest drug distributor Polska Grupa Farmaceutyczna (PGF) maintains its forecast of four billion zlotys of sales and a 64m zloty gross profit for 2004, PGF Financial Director, Jacek Dauenhauer, said recently, Interfax News Agency reported.
"I don't think anything is threatening the realisation of this forecast, particularly since we have the best quarter ahead of us, the fourth and first quarters of the year are usually the best season for pharmaceutical companies," Dauenhauer said. The company plans to record a 489m zloty net profit in 2004 against 36.6m zlotys in 2003. 

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Netia beats analyst forecasts with Q3 net profit

Alternative Polish fixed-line telecom operator swung to a higher-than-expected consolidated net profit in the third quarter of 2004 against a net loss in the same period of 2003, as the takeover of rival Polish telecom El-Net earlier this year and a licensing fee write-off linked to that firm bolstered revenues, Interfax News Agency reported.
Net profit totalled 44.7 million zlotys in the third quarter of 2004, higher than the 29.2 - 41.0 million zlotys analysts had expected, compared with a 824.6 million zlotys loss in the same period of 2003 which was mainly due to a one-time accounting procedure tied to licensing fees.
In 2004's second quarter, Netia posted a 38.4 million zloty net profit. Third-quarter revenue also outperformed analyst forecasts, rising 30.0 per cent year-on-year to 231.7 million zlotys. It rose 4.2 per cent frorm 222.3 million zlotys in the second quarter of this year. Analysts had forecast third-quarter revenue of 221.5-227.0 million zlotys.
The consolidated net profit was higher than expected after Netia included a 25 million Euro one-time licensing fee write-off for El-Net in its third-quarter profit and loss statement. Analysts had expected the company to book the amount as a capital increase, they said. Netia announced the 96.5 million zloty acquisition of its smaller rival from Elektrim Telekomunikacja (ET) in January 2004, justifying the purchase with an eye to its goal of doubling revenues by 2008, and begun consolidating El-Net's results with its own in the second quarter.

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