The two-year line replaces the country’s $30 billion facility that expires this month and has never been used. Poland plans to treat the new line as precautionary, according to an e- mailed statement from the IMF.
Poland indicated in September it was in talks with the IMF to renew the guarantee, which was first granted in May 2009 and renewed in January 2011.
“Poland has very strong economic fundamentals and policy frameworks,” IMF’s First Deputy Managing Director David Lipton said in the statement. “A credible inflation targeting regime has helped contain inflation, while the flexible exchange rate has played a key stabilizing role, and the sound financial supervisory framework has contributed to a well-capitalized, liquid, and profitable banking system.”
While Poland became the only European Union economy to avoid recession since the global credit crisis in 2008, it is feeling the impact of a downturn in the euro area, its biggest export market. Growth will slow to 1.75 percent this year from 2.25 percent as the economy is “ feeling the effects of headwinds from Europe,” IMF said in the statement concluding its staff visit in Warsaw on Nov. 16.
The fund singled out providing support for the economy as the key “policy challenge” as the government’s pledge to reduce the budget deficit to around 3 percent of output reduces its leeway to boost spending.
A new credit line “can play a critical role in preserving investor confidence, supporting macroeconomic policies, and providing a significant insurance against adverse external risks,” Lipton said in an e-mailed statement Dec. 19.