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Key Economic Data 
  2003 2002 2001 Ranking(2003)
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)

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Private sector 
% of GDP 

Update No: 105 - (30/01/06)

Energy crisis
The New Year, 2006, opened with a bang. Gazprom assured that by cutting off gas supplies to Ukraine for two days on January 1-2. Everybody began to reconsider their energy options, the biggest winner being Kazakstan. Russia is not the only energy giant on the Eurasian continent.
President Nursultan Nazarbayev of Kazakstan was re-elected in December and was re-inaugurated on January10th in his capital. He held a number of meetings on the same day in Astana. He could not have been given a better send-off than by Gazprom.
"New Polish authorities wish to support well-established Polish-Kazakstan relations. We talked to the president of Kazakstan about economic cooperation, including the pipeline Odessa-Brody-Gdansk project," the Senate chairman of Poland, Bogdan Borusevich, said after the meeting with Nazarbayev. 
Kazakstan is a key energy state, all the countries of the North European region, including Poland, are interested in its energy supplies. In future it seems that Kazakstan and Latvia and others would work more productively on construction projects, such as of a traffic road from China, through Kazakstan and to the Baltic Sea. Discussions in Astana also touched upon supplies of Kazakstani oil to North Europe.

Russia is of exceptional importance to Poland-President Kaczynski
Poland's relations with Russia remain immensely important of course. President Lech Kaczynski has described Russia as a country of exceptional importance to Poland and "a state with which we would like to have the best relationship possible." He was speaking at a meeting with members of the foreign diplomatic corps. 
The Polish leader said he hoped "2006 will be a year when these relations see a fundamental improvement." Gazprom did not exactly start the ball rolling here.
Kaczynski expressed the intention to pool efforts with Prime Minister Kazimierz Marcinkiewicz in shaping the country's foreign policy, both new to their jobs after recent presidential and parliamentary elections. In his opinion foreign policy is not only the diplomats' job, but also a vast field for cooperation in the economy, culture and sports, youth exchanges and the activity of non-governmental organizations. 

Poland's conservatives appoint liberal finance minister
The new government has yet to settle in. Liberal professor of economics Zyta Gilowska, 56, has been named to succeed Tereza Lubinska as Poland's finance minister.
The appointment of Zyta Gilowska, a former deputy leader of the opposition Civic Platform (PO) party, came hard on the heels of the resignation of Treasury Minister Andrzej Mikosz amid allegations of shady financial dealings. No successor to Mikosz has been named.
Lubinska, 53, was ousted from the country's three-month-old minority government after her calls for higher fuel taxes and a higher budget deficit. 
Under Prime Minister Marcinkiewicz, the Polish government agreed in December 2005 to reduce the 2006 deficit to 30.5 billion zloty from 32.6 billion zloty set by the previous government. She was also criticised for her attacks on some multinational retailers present in Poland.
"It has been my firm determination to establish order in public finances and I have always fought against any waste of money," Gilowska told a press conference in Warsaw. "Public spending has to be disciplined and rational." She favours quick eruozone accession and has also vowed to fight unemployment, which stands at 17.6%. 
Poland's next general election is scheduled for 2009. However, if the 2006 budget is rejected in parliament, early elections may be held this spring.

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Poland's car market sees worst sales for 2005

According to an annual report by the Samar Automotive Market Research Institute, last year Poland's car market was the worst for sales since 1991. The number of new cars sold in Poland came to just 235,000 and dropped dramatically in the second half of 2005, New Europe reported.
The year's figures fell short of 2004's total by almost 21 per cent. Car producers are continuing to register dropping sales and advertising campaigns are not increasing sales. "The market broke down mainly because the relationship between car prices and people's salaries is disadvantageous, so many can't afford even a relatively cheap car," Wojciech Drzewiwcki, CEO of Samar, said. "The second reason is instability in the area of taxation - Poles still do not know what rules apply as the law is constantly changed. The growth in the second-hand car market is rapid." 
Skoda is the market leader with 11.7 per cent market share. Its sales decreased by 26 per cent in 2005 against 2004s numbers. Toyota is next in line, with 10.9 per cent, while Fiat was forced into third spot.

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Polish budget airlines continue to grow

It is uncertain if the Hungarian WizzAir, which is currently the leader among budget airlines in Poland as it carried 1.3m passengers in 2005, will be able to keep its high position, as its main competitors - domestic Centralwings and Irish Ryanair - say they are about to launch an offensive, New Europe reported.
All budget airlines plan to increase the number of aircraft in their fleet, the year 2006 will see a boom in the carrier market. Ryanair hopes to carry 1.4m people over the next 12 months, whereas WizzAir plans to increase the number of its passengers to two million. This would translate into growth of more than 53 per cent and would secure the company the leading position for this year as well. Judging by the declarations of the six largest budget carriers, the market will continue to expand in 2006 by as many as 2.6m passengers, but since the smaller players have not revealed their projections yet the market could double.

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Bank Millennium opens 160 outlets 

With a major promotion and investment campaign Bank Millennium plans to build its best ever financial results. Currently, Bank Millennium has 234 branches in Poland but plans to build a further 160 outlets, approximately 100 of which will be placed in big cities, especially in Warsaw developing its business model and launching a long-term advertisement campaign with an investment of 190 million zloty during the next three years, New Europe reported.
Bank Millennium's CEO, Boguslaw Kott, said, "The promotion campaign will last until May 2006 and the bank's infrastructure will be rebuilt during the next three years. We are also going to put more care into e-banking. These latest moves follow hot on the heels of the bank's record financial results for 2005."
The bank earned 567 million zloty in net profit, almost double compared to 2004 and hitting a new record in the bank's 16-year history. The value of loan, credit card and investment-fund commissions increased by 17.9 per cent in 2005 and the company's individual share value rose by 65 per cent.
Moreover, the company is going to alter its business model by putting its individual-banking, key-client and small- and medium-enterprise operations under one roof. The Polish bank is fully supported by the Millennium BCP group.
Millennium BCP group's CEO, Paulo Teixeira Pinto, said, "Bank Millennium has become a pillar of the group and Poland has become one of the three most important markets for us. As our group changes from Portuguese to European, we fully support Bank Millennium's strategy."

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Poland urges Kazakstan to participate in Odessa-Brody 

Poland sees cooperation with Kazakstan in the oil and gas sector as a guarantee of not only its own energy stability, but of that of the whole Europe. The latest gas conflict between Russia and Ukraine has forced the Polish government to intensify its efforts to look for new and more stable ways to supply hydrocarbons to the country. Polish Economy Minister, Piotr Wozniak, talked to New Europe in an interview in Astana about transporting Caspian hydrocarbons to Europe. 

Minister, how can you explain such a growing interest of Poland in Kazakstan hydrocarbons lately? 
Kazakstan is an important partner for us from the point of view of possible diversification of the energy sources. Today it is the most important task of our new government. A way to achieve this objective may be the construction of Odessa-Brody-Gdansk oil pipeline. And we are seriously interested in Kazakstan's participation in this project. 

But there have been talks about this project for years, and so far it is only talks…
Not only Poland is interested in this project, but also the EU. So the interests of our country intertwine with the interests of all Europe. As you know, as early as in 2003, a trilateral declaration was signed that evaluated this project as "a project of energy security of Europe." Already some real steps have been made. Last year the EU allocated two million Euro for a feasibility study and appointed a consortium to work on it. And already in January this year we expect to receive the first information about economic expediency of this project.
With respect to Kazakstan's involvement in this project, as far we know, this country is looking for new export markets for its oil, of which the annual production will hit 150 million tonnes by 2015 according to the (Kazak) minister of energy. We can see Kazakstan's efforts expanding its transport opportunities, and the construction of an oil pipeline to China is a step in this direction.

Since you have mentioned energy security of Europe, how would you evaluate the recent "gas row" between Russia and the Ukraine?
The gas situation in the Ukraine has affected not only Poland, but also Austria, Italy and France. All Europe has felt the impact of this problem. We had to use severe saving measures and to cut gas supplies to our industrial enterprises.
This is not new to us. A similar situation happened in February last year when the Yamal gas pipeline was shut off for two days. And this issue has already been discussed in the EU. In Poland supplies are controlled by private companies and not by the government. And we have asked our firm about the reasons for such a situation. But nobody has provided any official explanation to it as to what had happened. This is the risk. And we could live with such a risk, but for that we should know when and for how long the supplies will be reduced so that we could prepare ourselves accordingly. But it's not the case now. This is exactly why we are looking for alternative gas supplies. And this partly explains our interest in Kazakstan. 

Did Poland influence the gas conflict between Russia and the Ukraine?
Poland, as a EU member, must resolve all issues in accordance with the EU principles, therefore we acted through the official channels. But in any event, all gas supplies from Russia are carried out under Gazprom contracts and it is Gazprom that should comply strictly with its obligations. In case of any difference with the Ukraine, the Russian company should provide alternative supplies to us. But it has not been the case. That is why we now intend to revise the contract conditions with Gazprom. We intend to receive gas at the Ukraine-Russia border and then to sign separate contracts with the Ukraine for the transit of our gas through its territory.

Minister, as it is known, Polish PKN Orlen competed with KazMunaiGas in another deal - acquisition of Unipetrum refinery, Czech Republic, and it purchased the plant. Now their interests have met in Lithuania. Why did PKN Orlen decide to buy Mazeikiu Nafta as well?
Orlen has ventured this acquisition because it was interested in expanding its product market. Although a private company, it is large and strong and its stock trades high at the exchange. The company has strategic interests in the east. And after the acquisition of Unipetrum in Czechia, the company is primarily looking at enhancing its commercial opportunities. Orlen owns a large network of service stations in the country, and Mazeikiu Nafta is attractive not only because of its proximity to Poland but also because it is not just an oil refinery but a whole complex that has an access to the transit terminal in Butinge, which creates additional opportunities for successful export and import of oil products. 

And how many refineries does the company own?
Today two: a refinery in a Polish town of Plotzk and Unipetrum in Czechia. Should it get the new deal, Mazeikiu Nafta will become the third refinery on Orlen's assets. 

You have also mentioned joining the forces and capabilities of two oil companies: Polish Orlen and Kazak KazMunaiGas in the Mazeikiu Nafta tender in Lithuania. It's an interesting position, how can you explain it with the two companies being competitors in essence?
This is a question to the company rather than to me. But I think that Orlen is looking for good oil suppliers at the same time. And KazMunaiGas with its obvious potential is a good partner as far as oil supplies are concerned, as it has good relations with Transneft. Besides, considering Kazakstan's ambitious plans, not entire oil produced will be sold through Russian and China. And this was discussed openly with (former Kazak) Minister of Energy, Valdimir Shkolnik. And (former Kazak) Minister of Economy (Kairat) Kelimbetov, also mentioned that Kazakstan is interested in diversification of its oil export routes. Cooperation in the oil and gas sector is mutually beneficial. Poland and Lithuania are EU members and this provides a guarantee of a stable legal environment and thus firm guarantees for KMG, as the agreement will be based on standard European conditions. And Orlen is a good brand in Europe. It may therefore make sense for the two companies to join their forces and to detail the conditions on which they can cooperate.

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Dried fruit and nuts sector, two large groups 

Domestic dried fruit and nuts producers are about to consolidate. The market may soon be composed of two large groups based on two companies, Atlanta Poland and Uno Fresco Tradex (UFT), New Europe reports.
The value of the retail raisins and nuts market in Poland is estimated at 3.500 million zloty, and it is expanding by five to six per cent annually. At the end of last year the market was divided among a number of players. One of the purposes of the merger would be the expansion of the new entity outside Poland, especially in countries to the East.

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KSEZ signs 2 investment deals 

At the beginning of the year 2006 the Katowice Special Economic Zone (KSEZ) signed two investment deals. Steel company Ugine & Alz has agreed to invest 9.4 million Euro (36 million zloty) in KSEZ, and lubricant producer Smart Plus has committed to a three million zloty investment. Last year, the zone also attracted a 35 million Euro (134 million zloty) investment from metal parts and components producer, American Johnson Controls, New Europe reports.
Piotr Wojaczek, KSEZ's CEO said, "Surpassing 2005's record high investment value in our zone will be quite hard, but we have ambitious plans to at least achieve equal results. We want to have approximately 25 new investment projects, worth 200-250 million Euro (765-956 million zloty) and delivering 3,000 new jobs. We are already involved in negotiations with eight companies, four of them being interested in rather big projects worth 40-50 million Euro (152-190 million zloty."

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Profits for Teta in 2005 and acquisitions for 2006 

IT company, Teta, forecasts a healthy net profit of 2.65 million zloty on revenues of 23.3 million zloty for 2005 financial results. Jerzy Krawczyk, president of Teta said turnover was 7.2 per cent higher compared to 2004, while net profit increased by almost 30 per cent, New Europe reported.
According to the company's president, in 2006 Teta plans to maintain net profit growth, while its revenues should increase by at least over 10 per cent, which is the anticipated increase of the ERP market. The company is considering acquisitions of ERP producers to the south of Poland and final decisions should be expected within at least two months. The anticipated purchases will not exceed much more than 10 million zloty and they will be financed from the company's own capital and bank loans.

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Mittal Steel privatisation process of JSW

Puls Biznesu, the president of Mittal Steel Poland (MS), Vijay Kumar Bhatnagar, officially announced that the enterprise will attempt to participate in the privatisation process of coal mine Jastrzebska Spolka Weglowa (JSW). "Our strategy is based on rational investments in coal, whenever there is an occasion," said Bhatnagar. The privatisation of JSW will be conducted through flotation of the company's shares on the Warsaw Stock Exchange (WSE) and although the issue prospectus is ready while the final details are being discussed, it is still unknown when precisely the IPO will take place, New Europe reported.
The steel concern needs coal for its two coke plants in Zdzieszowice and Krakow, which it acquired while taking over Polish Steel Mills. Up until now it was buying coking coal, now it wants to buy the producer. Bhatnagar revealed that the company plans to invest 600m Euro (2,277 zloty) by the first quarter of 2007 in four coal mines that belong to MSP.

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Vodafone looks at doubling its stake in Polkomtel

Vodafone could double its stake in Polkomtel at an estimated cost of 860m Euro (£585m) after one of its fellow shareholders in the Polish mobile operator put its holding on the market, The Financial Times reported on February 4th.
The UK mobile operator said it was looking at the possibility of increasing its stake but would not confirm that it would be willing to pay the 214.04 Euro per share price that is being demanded.
The 19.61 per cent stake - the same size as Vodafone's current holding - is being sold by TDC as a result of the Danish telephony company's takeover by a consortium of private equity groups.
Vodafone has stated its interest in expanding further across central and eastern Europe, and said that Polkomtel was obviously a business we know very well."
It may face competition for the stake from the other shareholders in the company, including PKN Orlen, a Polish fuel group.
The company's portfolio of minority stakes has been one of the concerns raised by some shareholders since it issued a profit warning in November.
The question of whether such stakes leave the company with insufficient control of its assets has been raised by several investors, who have expressed some broader concerns about Vodafone's performance under Arun Sarin, chief executive.
The company has all but completed a round of shareholder meetings following the publication of its key performance indictors recently.
Most large shareholders have expressed concerns, publicly or privately. Standard Life, among others, has called on the company to divest itself of its investment in Verizon, the US operator, but Insight, Vodafone's ninth-largest investor, has gone on the record to support the company. 
Some shareholders said they were waiting for the arrival of Sir John Bond as chairman in July before exerting more pressure, although others hoped their concerns would be addressed sooner.

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