Without reform, the burden will grow even bigger. The government has proposed a new design that would trim the current system of funding pensions with payroll taxes, and add two layers of investment-funded pension. Parliament has passed just four of the 11 laws needed to put the new system into effect. The state owns half of industry, half the banking capital, three-quarters of the capital in insurance and almost all the basic infrastructure in transport, energy and telecoms. Insurance is dominated by a bankrupt state-owned firm, PZU .
Banking is in better shape.
Most commercial banks have dealt with their bad loans and several have been privatised, sometimes to foreigners with capital and know-how. But it is unclear whether Polish banks can survive the competition that will come when restrictions on foreign ones are lifted in 1999. Especially now that banks are lending heavily, that is worrying. Explicit import barriers are low, and will fall further with the phasing out of most restrictions on trade with the EU . For the EU , this is Poland's least digestible part.