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To Poland's New President: Stay the Course

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LECH WALESA, Poland's new president, will face tough choices when he assumes office in a few days. They will be critical decisions for Poland, but their impact will be felt beyond the country's borders. The successful transition to democracy and a free economy in Poland is a key test for Central and Eastern Europe. Poland's neighbors in the region and its friends in the West are watching closely to see how the new government deals with the economic reform program launched by its predecessor. The first round of presidential elections last month - and in particular the poor electoral showing of Prime Minister Tadeusz Mazowiecki - was a cry of ``ouch'' from many Poles, who were feeling the bite of the government's market-oriented reforms.

Over a year ago, Poland embarked on a course of deep political and economic change, launching the most dramatic and bold reform in the new democracies of Eastern Europe. The ``shock therapy'' economic program reversed the inefficient communist central planning system, introduced market forces into the economy, eliminated government subsidies on a massive scale, allowed prices to float, and stopped hyper-inflation.

The same program envisages privatization on an unprecedented scale and at an unprecedented pace. Coupled with dramatic institutional changes, it is aimed at creating a competitive market environment.

Following a painful period of adjustment and sacrifice, Poland has made remarkable progress in several critical areas:

The country's 2,000 percent annual inflation dropped to 4 percent last month;

Long lines at shops have been replaced by full shelves;

The exchange rate has been stable for nearly a year, and the zloty is fully convertible domestically;

Inefficient factories are being closed down;

New private enterprises are emerging daily as thousands of small businesses are established;

A rapidly growing number of foreign investors are beginning to participate in the Polish economy;

Liberalized imports are competing with domestic products, forcing Polish producers to adopt more efficient and competitive methods;

Banking reform has begun and a capital market is emerging;

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