RESTRICTEDWORLD TRADE
ORGANIZATIONS/WPGR/W/16/Add.4
2 March 2000
(00-0816)
Working Party on GATS Rules Original:  English
COMMUNICATION FROM THE REPUBLIC OF POLAND
Response to the Questions Relevant to the Information Exchange Required
Under the Subsidies Negotiating Mandate
Addendum
The following communication is being circulated at the request of the delegation of the
Republic of Poland to Members of the Working Party on GATS Rules.
_____________
All data concerning the amounts of subsidies contained herein is given in New Polish Zlotys
(PLN)1.
The responses cover subsidies applied in the services sector in Poland in the period of 1997 –
1998.
                                                     
1 The average exchange rate between New Polish Zloty and US Dollar was:
1 PLN = 0.308 USD in 1997,1 PLN = 0.286 USD in 1998.S/WPGR/W/16/Add.4
Page 2
I. LOAN FROM EFSAL FUNDS
1. Characteristics of the programme
Support of businesses involved in restructuring or liquidation processes, especially those
located in the regions particularly endangered with unemployment, through:
1. Provision of resources (loans) for restructuring investments and for "hedging"
purposes (grant for allowances for personnel dismissed due to group reductions,
pension and retirement allowances, remuneration for unused annual leaves,
compensations for shortened notice of termination).
2. Support of buyout by the Industrial Development Agency (IDA) the outstanding
debts from banks provided that the bank is not involved in conciliatory proceedings
pursuant to the law of 3 February 1993 concerning financial restructuring on
enterprises and banks and changing some laws (Journal of Laws No. 18, item of1996, No. 52, item 235, No. 106, item 496, No. 118, item 561 of 1997, No. 98,
item 603, No. 141, item 943) and buyout of the claims of the debtor's providers (the
amount of the debts bought out by the IDA must represent 10 per cent of the total
amount of the debtors liabilities, however can not be less than PLN 100 000 – or the
sum of these liabilities represents 20 per cent of the total amount of the debtor'sliabilities).
The following entities are eligible for the assistance, which can be granted only once:
• state owned enterprises;
• companies which stock is owned by the Treasury;
• companies which stock is owned by the Treasury and the employees (farmers,
fishermen);
• companies which stock is owned by the Treasury and other organisational units and
natural persons, where the liabilities were converted into stocks (shares) pursuant to
conciliatory agreements reached with the banks according to the procedures determinedby the law of 13 February 1993 concerning financial restructuring on enterprises and
banks and changing some laws – for the "hedging" purposes only;
• companies which stocks have been contributed as a share in Sugar Partnerships, as long
as their stock is held by the Treasury, Sugar Partnerships, employees and sugar beetsproducers, or when the Treasury is the only shareholder.
The entities requesting the EFSAL assistance must submit an application that inter alia
includes information concerning their current economic and financial standing as well as their
financial standing during the preceding years, forecasts for the coming years, the programme of short,
medium and long term actions, SWOT analysis and:
- restructuring or liquidation programme;
- a copy of the application submitted to the relevant minister concerning transformation
of their enterprise into a company whose stock is held exclusively by the Treasury,
and in case of companies - information of the forecasted date of making the stocks of
the Treasury publicly available;S/WPGR/W/16/Add.4
Page 3
- information concerning the legal status of the real estate:  buildings and land;
- opinions of:  financing bank, Tax Office;
- standpoint of the principal borrowers concerning the debts restructuring;
- information on the effects of the actions aimed at obtaining financial resources from
other sources;
- the programme for making the unnecessary assets productive;
- proposals related to restructuring, employment and wages freeze agreed with the trade
unions.
The conditions of the loans awarded within  the Ist Tranche were more advantageous
compared to commercial loans – the interests rate from 1/3 to 0.8 of the refinanced credit rate (mostly
0.5), the maturity periods were from 2 to 6 years, and the repayment grace period was in most cases 1
year, the principal repayment – quarterly and the interests monthly.  According to the
recommendations of the World Bank, the loans awarded within the IInd Tranche are less
advantageous (the interests rate may not be lower than the WIBOR rate).
The decision concerning allocation of the resources is made by the Minister of Finance (up to
PLN 2 million in case of a loan and up to PLN 0.5 million in case of a grant).  The assistance that
exceeds these amounts is allocated by the decision of the Council of Ministers.
2. Policy objectives of the programme
Support of enterprise restructuring and provision of "hedging" in case of the liquidation, when
it is impossible to obtain resources for these purposes from other sources.
3. Availability of the programme to the services sector vs. goods sector
No special rules.
4. Form of the subsidy
Grant (exclusively for the "hedging" purposes) and investment loan.
5. Sectors eligible under the subsidy
Among services sector : typography, transport, construction, heating supply.
6. Eligibility criteria
See point 1.
7. Calculation of the subsidy
No fixed rules.  The amount of the subsidy depends on the proposed restructuring or
liquidation programme described in the application for the support from EFSAL funds.S/WPGR/W/16/Add.4
Page 4
8. Time Limits
The agreement between the International Bank for Reconstruction and Development and the
government of Poland assumed extending of adaptation loans for the enterprises and financial sector
in three tranches:
Ist Tranche – USD 125 million;IInd Tranche – USD 100 million;
IIIrd Tranche – USD 125 million.
The Ist tranche (being an equivalent of USD 125 million) amounting to PLN 282.4 million –
was made available in 1994.  The IInd tranche (being an equivalent of USD 100 million) amounting
to PLN 261.9 million – was received by the Treasury in April 1995.
Approximately 86 per cent of the EFSAL funds was consumed by the end of 1998.
The Polish Side has resigned from applying for the IIIrd tranche of EFSAL resources.
9. Disciplines assumed under the regional agreements
Pursuant to Art. 63 of the Europe Agreement establishing an association between Poland and
the EC, any public aid which distorts or threatens to distort competition by favouring certain
undertakings or the production of certain goods is incompatible with the proper functioning of the
Agreement, insofar as it may affect trade between the Community and Poland.  However during thefirst five years after the entry into force of this Ag reement, Poland shall be regarded as an area where
standard of living is abnormally low or where there is serious underemployment and any public aid
granted to promote the economic development may be considered to be compatible with the EU
common market.  The Association Council shall, taking into account the economic situation of
Poland, decide whether that period should be extended by further periods of five years.
10. Amount of assistance granted
In 1997 the total assistance provided amounted to PLN 75.5 million, including:  grants – PLN
12.8 million, and loans – PLN 62.6 million.  Within that, support for service sectors constituted:
- transport – PLN 7.2 million in loans
- typography – PLN 1.9 million in loans- construction – PLN 1.4 million in grants, PLN 4.0 million in loans
In 1998 the total assistance provided amounted to PLN 53.6 million, including:  grants – PLN
14.7 million, and loans – PLN 38.8 million.  Within that, support for service sectors constituted:
- transport – PLN 3.0 million in grants, PLN 8.4million in loans
- construction – PLN 0.2 million in grants, PLN 2.0 million in loans
- heating supply – PLN 2.0 million in loans
11. Effects on tradeS/WPGR/W/16/Add.4
Page 5
The programme does not directly impact the foreign trade.
II. DIRECT GRANTS FOR EXTRA CHARGES TO PRODUCTS AND SERVICES
1. Characteristics of the programme
I. Grants for the meals sold in milk bars
The businesses conducting the activities included in the scope of the regulation receive grants
within the limits determined by the budget law.  The businesses may obtain grants for the meals sold
in milk bars after fulfilment of the criteria:
• They run milk bars, defined as self-service, non-alcoholic, catering enterprises for public,
which sell meals produced of milk, dairy and vegetable products used to prepare regular
meals.
• The above-mentioned milk bars apply margin not exceeding 25 per cent of the value of used
food products.
• They maintain quantitative-qualitative ledgers of the food products used for preparing the
meals in the milk bars.
II. Grants for railway passenger domestic transport
Direct grants for railway passenger transport were awarded for the transport:  within urban
agglomeration, regional (local), inter-regional (long distance) by means of regular passenger trains,
speeded-up trains, excluding passenger transport by means of express, Inter-City, Euro-City and
Euronight (hotel) trains in domestic and international communication.  The regulation of the Ministerof Finance promulgated annually, beside setting the level of the grant rates, determines the scope of
subsidies for railway transport and sets the conditions to be met by the carriers in order to obtain
grants for transport services they provide.  In 1997 these issues were regulated by the Minister's of
Finance regulation of 31 July 1997 on setting the rates of direct grants for passenger railway and bus
transport (Journal of Laws No. 94, item 574).
In order to obtain the grants the carriers had to fulfill all the following conditions:
• Provide transport services in accordance with the trains schedule;
• Apply tariffs not exceeding the official prices determined by the Minister of Transport and
Maritime Economy, and the tariffs or price-lists set by the carriers according to the provisions
of the law of 15 November 1984 – Transport Law (Journal of Laws of 1995 No. 119,
item 575 and of 1997 No. 23, item 117, No 96, item 591, No. 101, item 629, and No. 141,
item 942).
• To accept as valid rights of some persons to enjoy free or reduced price tickets as provided by
the law of 20 June 1992 concerning the rights to free and reduced price tickets for publictransport (Journal of Laws No. 54, item 254, of 1994 No. 40, item 150, No. 80, item 368,
No. 113, item 547 of 1995 r. No. 50, item 261 and of 1996 r. No. 100, item 460).
• To submit a list of the subsidised transport units to the Minister of Transport and Maritime
Economy and obtain confirmation of including these units in the aggregated amount of the
grant for the given fiscal year, in order to determine rate of the subsidy.S/WPGR/W/16/Add.4
Page 6
III. Grants for passenger bus transport
Grants for bus passenger transport were awarded for the regular domestic inter-city transport.
In order to obtain the grants the carriers had to fulfil all the following conditions:
• Provide transport services in accordance with the buses schedule agreed by all the carriers
during the district schedule conferences;
• To apply official prices for regular domestic bus transport, as determined by the Minister of
Transport and Maritime Economy in consultation with the Minister of Finance;
• To accept as valid the same persons rights to enjoy free or reduced price tickets according to
the provisions of the law of 20 June 1992 concerning the rights to free and reduced pricetickets for public transport;
• To submit a list of the subsidised transport units to the Minister of Transport and Maritime
Economy, and those who organise transport with in the Viovodship of Katowice to the Voivod
of Katowice, and obtain confirmation of including these units in the aggregated amount of the
grant for the given fiscal year, in order to determine rate of the subsidy.
IV. Grants for publication of specialised school and university books
These grants are awarded for publishers of school and university books:
• for teaching specialised subjects in vocational schools;
• for schools of national minorities;
• for special schools;
• for university books.
The above-mentioned grants may be awarded for the publication of the books approved for
use in schools, therefore fulfilling the education programme requirements.  The Minister of National
Education determines the list of the approved and recommended books for use in schools.  The bookssubsidised by the grants are published in small number of copies, which increases the publication
costs.  Without the above-mentioned grants the publishing houses would be scarcely interested in
publishing the books the demand for which is limited.
The Ministry of National Education evaluates the applications of publishers willing to obtain
the above-mentioned grants.  The specimen of the application form is included in the ordinance of the
Minister of National Education of 27 August 1992.  The grants are awarded to the publishers of the
school and university books on the basis of rates for the printed sheet.  The Minister of NationalEducation annually determines the rates of grants for school and university books.
2. Policy objectives of the programme
Lowering the prices of domestic passenger transport, meals sold in milk bars, specialised
school and university books in order to provide increased accessibility of some services to specific
social groups.S/WPGR/W/16/Add.4
Page 7
3. Availability of the  programme to the services sector vs. goods sector
Programme applies to services sector only.
4. Form of the subsidy
Grants from the state budget.
5. Sectors eligible under the subsidy
See point 1.
6. Eligibility criteria
See point 1.
7. Calculation of the subsidy
See point 1.
8. Time limits
The value of the grants is set in the state budget every year.
9. Disciplines assumed under the regional agreements
Pursuant to Article 63 of the Europe Agreement establishing an association between Poland
and the EC, any public aid which distorts or threatens to distort competition by favouring certain
undertakings or the production of certain goods is incompatible with the proper functioning of the
Agreement, insofar as it may affect trade between the Community and Poland.  However during thefirst five years after the entry into force of this Ag reement, Poland shall be regarded as an area where
standard of living is abnormally low or where there is serious underemployment and any public aid
granted to promote the economic development may be considered to be compatible with the EU
common market,  The Association Council shall, taking into account the economic situation of
Poland, decide whether that period should be extended by further periods of five years.S/WPGR/W/16/Add.4
Page 8
10. Amount of assistance granted
In 1997 the grants under this scheme amounted to PLN 928.4 million and were awarded for:
In millions of PLN
Meals sold in milk bars 13.9Passenger domestic railway transport 710.0Passenger inter-city bus transport, including grants for inter-city
connections in the urban agglomeration of Katowice organised
(delegated) by local governments, and municipal associations193.4
Publication of specialised school and university books 11.0
In 1998 the grants under this scheme amounted to PLN 752.6 million and were awarded for:
In millions of PLN
Meals sold in milk bars 17.0
Passenger domestic railway transport 560.0
Passenger inter-city bus transport, including grants for inter-city
connections in the urban agglomeration of Katowice organised
(delegated) by local governments, and municipal associations164.0
Publication of specialised school and university books 11.6
11. Effects on trade
Considering the purposes of the programme, there are no effects on the foreign trade.
III. ASSISTANCE FOR RESTRUCTURING  OF THE BANKING SECTOR
1. Characteristics of the programme
(i) Treasury bonds for increasing the capital of  Bank Gospodarki Zywnosciowej S.A (BGZ) and
regional banks and for restructuring of claims of the cooperative banks
Pursuant to the provisions of the law of  3 February 1993, the BGZ obtained the Treasury
bonds amounting to PLN 1 622.4 million for increase of the bank's own capital.  According to the
conditions of the issue of the Treasury bonds the buy-out of the bonds (issued in 1994) will take place
by the year 2009.
At the same time, within the issue of 1994 and pu rsuant to the provisions of the Minister's of
Finance ordinance of 2 June 1995 concerning the proportion of the split of the Treasury bonds for
restructuring of claims, between the regional banks and associated cooperative banks (Journal ofS/WPGR/W/16/Add.4
Page 9
Laws No.64, item 330), part of the bonds amounting to PLN 45 million was earmarked for increasing
the reserves of the regional banks established according to the provisions of the above-mentioned law
of 24 June 1994.  Since 1995 the bonds have been transferred to the successively emerging regional
banks.
The Treasury bonds are also earmarked for restructuring of the claims of cooperative banks
associated with the regional banks.  Pursuant to the provisions of the law of 24 June 1994 and the
provisions of the Minister's of Finance ordinan ce of 2 June 1996, the Treasury bonds of the value that
on the day of the issue was over PLN 251 million were earmarked for that purpose.
According to the conditions of the Treasury bonds issue, the buy-out of the bonds (issued in
1994) will take place successively within the period 1996-2009.
(ii) The refundable assistance for cooperative banks implementing the repair programmes
According to the resolution adopted by the Parliament on 12 July 1995 concerning support of
the repair processes carried out by cooperative banks, the amount of PLN 40 million was earmarked
for refundable assistance to the cooperative banks taking over other cooperative banks being in crisis.
The National Bank of Poland in consultation with the Ministry of Finance provides this
assistance within the limits of the earmarked funds by respective decrease of the portion of profits
paid to the state budget.
(iii) Tax incentives for cooperative banks establishing regional banks
The provisions of the ordinance of the Minister of Finance concerning abstaining from
income tax collection from some cooperative banks, granted additional financial support to the
cooperative banks.
Moreover, by the virtue of the Minister's of Finance ordinance of 4 July 1996 (Polish Monitor
No. 42, item 406) the collection of the taxes from BGZ S.A, regional banks and cooperative banks on
income related to the Treasury bonds destined for restructuring of cooperative banking sector, was
also abstained.  The overall financial results of the above-mentioned ordinance are estimated to reach
PLN 620.4 million by the year 2009.
2. Policy objectives of the programme
Restructuring of the banking sector.
3. Availability of the programme to the service sectors vs. goods sectors
Programme applies to service sector only.
4. Form of the subsidy
Grants, loans, tax incentives.
5. Sectors eligible under the subsidy
Banking sector.
6. Eligibility criteriaS/WPGR/W/16/Add.4
Page 10
(i) The process of reconstruction of the co-ope rative banking sector continued throughout the
year of 1997 according to the provisions of the law of 24 June 1994 concerning restructuring
of cooperative banks and Bank Gospodarki Zywnosciowej ( Food Economy Bank)  and change
of some other laws (Journal of Laws No. 80, item 369, of 1995 No. 142, item 704, of 1996
No. 106, item 496, and of 1997 No. 121, item 770, No. 140, item 939).  The programme wasaimed at creation of three-tier co-operative banking group that would include local
cooperative banks, regional banks and national bank.  The undertaken actions resulted with
establishment of all 9 regional banks predicted by the law.  In 1997, pursuant to the
provisions of the above-mentioned law, the regional banks obtained the Treasury bonds
totalling PLN 69.3 million (according to the bond's value on the day of the issue), including
PLN 36.3 million earmarked for restructuring of the claims of the associated cooperative
banks and PLN 33.0 million for increase of the capital reserves of the regional banks.Together – including the treasury bonds transferred  to the banks in the period of 1995-1996 –
the regional banks obtained the Treasury bonds totalling PLN 194.4 million, of which
PLN 131.4 million was earmarked for claims restructuring and PLN 63.0 million for capital
reserves increase.
(ii) Refundable assistance for cooperative banks implementing the repair programmes
In 1997 within the limits of the earmarked funds, the National Bank of Poland in consultation
with the Ministry of Finance provided the assistance totalling PLN 9.8 million to
5 cooperative banks.
In the period 1995-1997 such assistance totalling PLN 39.8 million was provided to
31 cooperative banks.
Moreover, according to the resolution adopted by the Parliament on 11 January 1996
concerning the assumptions of the financial policy for 1996, NBP has earmarked the amount
of PLN 40 million for refundable assistance to support the banks taking over other
cooperative banks being in crisis.  In 1997, NBP in consultation with the Minister of Finance
provided assistance totalling PLN 25.7 million to 15 banks out of the resources earmarked forthis purpose and not consumed in 1996.
Altogether, from the resources earmarked for s upport of the cooperative banking sector and in
connection with the resolution of 11 January 1996, the assistance totalling PLN 36.7 million
was provided to 21 banks.
In attempt to further support the process of cooperative banks restructuring and implementing
the Parliament resolution of 24 January 1997 concerning the assumptions for the financial
policy for the year 1997, NBP has decided to earmark the next tranche of the assistance ofPLN 20 million.  Within the limits of these re sources, in 1997 NBP in consultation with the
Minister of Finance has provided the assistance amounting to PLN 9.6 million to 7 banks.
(iii) Tax incentives for the cooperative banks
The ordinance of the Minister of Finance concerning abstaining from income tax collection
from some cooperative banks (Polish Monitor No. 5, item 39), granted additional financialsupport to the cooperative banks.  According to the provisions of the ordinance the abstaining
regarded the following:
- 70 per cent of the income tax due for 1996 of the cooperative banks that establish
new regional banks according to the provisions of the law of 24 June 1994
concerning restructuring of cooperative banks, BGZ and change of some other laws;S/WPGR/W/16/Add.4
Page 11
- the income tax due for the year 1997 from the remaining cooperative banks up to the
equivalent of 70 per cent of the tax due for 1996.
The condition making possible to use this abatement was to transfer at least 80 per cent of the
1996 balance surplus to the undivided fund of cooperative banks' resources and transfer all
the means obtained due to the abstained taxes.
The estimated outcome of implementation of the above-mentioned ordinance is for the 1996
budget – approximately PLN 50 million an d for 1997 budget – about PLN 23 million.
The support actions undertaken in the period of 1994-1997 implemented inter alia  in the form
of tax abatements or Treasury bonds for restructuring, contributed to improvement of the
financial standing of the cooperative banks.
It was reflected by increase of net equity, total receivables and improvement of the solvency
ration of the cooperative banks as well as by decrease of the general loses of these banks.
7. Calculation of the subsidy
No fixed rules.  The amount of the subsidy depends on the restructuring programme and is
decided by the Minister of Finance acting in agreement with the National Bank of Poland (see also
point 5).
8. Time limits
According to the conditions of the Treasury bonds issue, being the main component of the
assistance provided within the scope of the above-mentioned programme, the buy-out of the bonds
will be terminated in the year 2009.
9. Disciplines assumed under the regional agreements
Pursuant to Article 63 of the Europe Agreement establishing an association between Poland
and the EC, any public aid which distorts or threatens to distort competition by favouring certain
undertakings or the production of certain goods is incompatible with the proper functioning of the
Agreement, insofar as it may affect trade between the Community and Poland.
However during the first five years after the entry into force of this Agreement, Poland shall
be regarded as an area where standard of living is abnormally low or where there is seriousunderemployment and any public aid granted to promote the economic development may be
considered to be compatible with the EU common ma rket.  The Association Council shall, taking into
account the economic situation of Poland, decide whether that period should be extended by further
periods of five years.
10. Amount of assistance granted
In 1997 the assistance provided to the cooperative banking sector totalled approximately
PLN 137.5 million, including the assistance provided in the form of:S/WPGR/W/16/Add.4
Page 12
- Treasury bonds earmarked for restructuring of the cooperative banks and newly
established regional banks – PLN 69.3 million;
- loans extended by NBP – PLN 45.2 million; and
- tax incentives – PLN 23 million.
In 1998 no state aid granted for restructuring the banking sector.
11. Effects on trade
The programme does not directly impact the foreign trade.
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