Poland was an economic basket case when Hanna Gronkiewicz-Waltz became president of Narodowy Bank Polski, the country's central bank, in 1991. Inflation had topped 600% the previous year, the economy had contracted by 7%, unemployment was 12% and rising, and the banking system was on the brink of collapse.
But after nearly a decade of Gronkiewicz-Waltz's tough financial policies, the country boasts one of the most vibrant economies in Central and Eastern Europe. No wonder opinion polls consistently name Gronkiewicz-Waltz one of the country's most highly regarded public figures. She has also inspired other central bankers in central Europe to adopt her hard-money approach.
A former banking law professor, the 46-year-old Gronkiewicz-Waltz says preparing Poland for membership in the European Union is her top priority. "When communism collapsed, it was obvious we would want to join [the EU] to guarantee our freedom and ensure our prosperity," she says. That means radical financial-sector reforms and painful monetary policies. But Gronkiewicz-Waltz has never buckled, despite howls of protest from politicians, trade unions, and business.
Faced with a largely insolvent banking system, she forced dozens of financial institutions to merge or go bankrupt. She curbed inflation by raising interest rates to punishing levels. When Parliament complained, she carried on regardless. The result: Poland has a robust financial system, and inflation has dropped dramatically. The economy is growing at around 6% a year. Foreign investment is expected to reach $12 billion this year.
But Poland isn't out of the woods yet. Inflation still hovers around 10%. The current-account deficit is a worrying 8.3% of gross domestic product. And while the central bank took a bold step on Apr. 12 by allowing the zloty to trade freely, the currency's gyrations since then have unsettled some investors. Poland's big challenge now is to bring inflation back down without jeopardizing growth. The solution, she says, is for the government to reduce the budget deficit. That would curb inflation and give her a chance to cut interest rates and maintain growth. Whatever happens, the long-term goal of entry into the EU still beckons.