Newspaper article The Christian Science Monitor

Will ExIm Bank Join the Rescue? POLISH AID

Newspaper article The Christian Science Monitor

Will ExIm Bank Join the Rescue? POLISH AID

Article excerpt

WHILE Congress is considering foreign aid for Eastern Europe, the Bush administration is pursuing alternate means to help.

Its decision last week to relax export controls of technologies and goods to Eastern Europe will make modern computers, telecommunications gear, and machine tools available for the new democracies, including Poland.

The government's latest effort is to convince the United States Export-Import Bank (ExIm Bank) on the merits of opening up medium and long-term credits and loan guarantees for Poland. The Treasury is also trying to convince commercial banks to forgive some Polish debt.

US officials heard a plea this week in Washington for funds from Poland's deputy prime minister and Finance Minister Leszek Balcerowicz. Asked about ExIm Bank financing, Mr. Balcerowicz said that he discussed it with US officials and expects to hear a positive response soon. "We're tired of hearing `No, no, no.' We want to hear `Yes, yes, yes.' "

The minister is also seeking an 80 percent reduction in the interest and principal due on its debts. Debt service charges currently would absorb 6 to 7 percent of national output - if they were actually being paid. He puts Poland's debt at $38 billion - $30 billion to official creditors, $8 billion to commercial creditors. Bank in political bind.

ExIm Bank is caught in a political bind, according to a senior US Treasury official. "The administration has gotten flack for not doing enough for Eastern Europe, and they want to point to ExIm and say `Look what we're doing to help.' "

Telecommunications equipment and power plant technology are among the goods the US wishes ExIm to finance. The export credits would go to both the Polish government and private sectors, says an ExIm official.

Poland's public sector is "bankrupt" and a poor risk, according to the Treasury official. ExIm's approach should be prudent, considering it was badly burned by a Polish debt default in the early 1980s, he says. "If you lend to any public sector at all, it should be to one with an imminent privatization program."

Poland's new plan to sell workers up to 20 percent of state-owned industries is bogged down in the National Assembly, held up by labor groups seeking a greater share of ownership. …

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