POLAND hand, official statistics probably overstate the decline in production since they give insufficient weight to small new firms. (At the beginning of 1991 the index was broadened to include enterprises employing 25 or more persons from the previous minimum of 100). Also, a 30 percent decline in real private conswnption i n 1991 has been estimated by the Federal Statistical Office, but this is probably an overstatement since consumers stockpiled goods in 1990 in anticipation of the price liberalization.

CSFR has taken the lead in negotiating new agreements to revive nonconvertible trade. This is in response to a shortage of convertible currencies in the former USSR, which prevents the orderly settlement of past imbalances in hard currency according to the agreement under which CMEA was dismantled in January 1991. Early in 1991,an agreement was signed with the USSR providing for mutual trade (excluding energy) equal to about 30 percent of the 1990 level. Subsequent arrangements have focused on bilateral deals with individual republics and producers.

The two new commercial banks extended less credit than was allowed under the restrictive credit ceilings in the first quarter of 1991. This seems to have been largely due to their reluctance to extend any new credits to state enterprises whose continued existence is uncertain, and to new private entrepreneurs in the absence of a bankruptcy law. Following protests by state enterprises about the lack o crd. aviaii. the. Stt BakrlxdsIghl h of credit availability, the State Bank relaxed slightly the regulationsgoverning borrowing abroad. Companies were regculagei to make full use of normal trade-related forencouraged . eign credits. In addition they may now take up foreign credits, with the.pemission of the State Bankonacaseby case basis. In addition, at least two foreign banks have been granted licenses to do full banking business in CSFR.

<!-- Start of picture text --> Piouro 20: Polnd - 1ExDoure bv Creditor<br>3.70% 1 0 1 6%<br>23.06X<br>.07x<br>M n&tnwi w1cUal cwwci E o0w Pr pate<br>FIIt" ON*.<br>C-" RK<br><!-- End of picture text --> In February 1990, Paris Club creditors agreed to reschedule 100 percent of principal and interest arrears due through March 1991. This agreement in large measure contributed to net official bilateral financing of US$2.4 billion in 1990. Disbursements of new credits amounted to US$215 million cnly. Repayments of less than US$100 million were made to the US commodity Credit Corporation on loans not covered by the Paris Club rescheduling.

Negttion t commeril bn remainedadocked throughout 1990, and resulted in the accumulation ofU13bLlnintalfersocmecalaksy of US$1.3 billion in total arrears to commercial banks by May 1991. Negotiations continued to be protracted in 1991, and further interest arrears of US$850 million were accumulated in the course of the year. The short-term trade facilities with commercial banks were serviced and remained available.

For the entire year of 1991, Poland is likely to have received aboutUS$1 billion in new medium and long-term disbursements mostly from international financial institutions and official bilateral creditors. The new credits combined with the rescheduling of interest due in the first quarter to the Paris Club and the accumulation of interest arrears to commercial banks resulted in total net external borrowing of US$2.1 billion in 1991. This more than offset the current account deficit of US$1.9 billion (after Paris Club interest payment reduction). No new lending from commercial banks is foreseen prior to an agreement.

The tiny proportion of short term debt both in overall debtandincommercialdebtalone,evenas farbackas 1986 is remarkable, given the situation in CSFR, a neighbor. In fact, the table shows that in all years except 1989, theentire ST obligations were owed to commercial banks. Other private creditors have experienced no debt servicing problems.

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