Its '81 debts rescheduled, Poland must face even bigger bills in '82
The negotiations are ended; long live the negotiations.
This might well be the cry of Poles who just rescheduled their country's 1981 debts with more than 500 Western banks in Frankfurt April 6. Tough new negotiations--or at least maneuvering--on Poland's 1982 debts will begin almost immediately.
Under the Frankfurt agreement 95 percent of the 1981 due principal of $2.4 billion does not need to be repaid until the 1985-88 period, with interest on the extension set at 1.75 percent above the London interbank offered rate. The remaining 5 percent of the principal will still have to be repaid this year.
Signing of the agreement, which was supposed to have taken place at the end of last year, was postponed until Warsaw had dribbled out repayment of the 1981 estimated $3 million to $5 million interest arrears.
Poland hopes the rescheduling of its 1981 debts will open the way for rescheduling its $10 billion 1982 Western government and private debts--and the extension of new bank credits vital to recovery of its economy.
The big jump in 1983 indebtedness, the spectacularly uncreditworthy Polish economy, and continued Western dismay over martial law in Poland all make new credits unlikely under present circumstances, however. Poland's interest debts alone for 1982 are $2.6 billion--more than the 1981 principal.
Poland's economy, as everyone knows, is in a shambles. The Western position is that Poland must go some way toward relaxing martial law before Western governments will discuss postponing 1982 debt repayments.
Meanwhile, a muted argument is going on in Warsaw over the extent of Poland's dependence on Western economic linkages.
At the most elementary level the argument concerns the elasticity of Western trade. Hard-liners argue Poland can say good riddance to the West and reintegrate its economy with the Soviet bloc's Comecon without encountering insuperable difficulties.
A few professional economists--whose views have gotten into the official press at least twice in recent weeks--argue on the contrary that only 9 percent of last year's imports could have been shifted from the West to the East. Privately, Polish officials have informed West German counterparts that 64 percent of Polish plants depend on Western imports and spare parts. Western economists say the figure is even higher in some key industries such as coal mining.
Certainly there are no signs so far that Gen. Wojciech Jaruzelski's government might let economic pressures soften its political toughness. The mounting press campaign against the Solidarity trade union suggests just the opposite. So does the government's unwillingness to make even the gesture of lifting formal martial law while keeping firm political control under civilian law.
Nor are there any signs of some economic miracle that might make Poland attractive to private Western creditors. Official statistics from April show a 12 percent fall in productivity last year and a 13 percent fall in national income, with 40 percent of industrial capacity underused. In blaming these drops on Solidarity's rejection of work on Saturdays and on the hiking of wages by 25 percent, the Polish planning commission warned that any appropriate curtailment of work to match productivity would have resulted in a 7 percent unemployment rate or 800,000 jobless persons.
The one relatively bright spot this year has been coal production, which rose to 47 million tons in the first quarter, up 6.2 million tons over the previous year.