IMF sees need for Polish pension reform

POLAND – The International Monetary Fund says further reform of state pensions and farmers pensions is needed to bolster reforms that have already taken place in Poland.

The IMF has applauded the overall growth in the economy, saying: “Following two difficult years, a strong recovery is within reach.” But the slowdown has hit employment, investment and financial sector profits.

“Yet, in some other respects, adjustments have left Poland stronger: firms and banks approach this recovery leaner and more competitive than in the past; wage setting has responded to the rise in unemployment; and price stability has been achieved.”

But more reforms in the social welfare and pension system are needed, the IMF says.

It wants the reforms that the government has already made to “be complemented by public sector retrenchment, further pension and social benefit reforms, farmer pension and support program reforms, and reductions in subsidies”.

The fund says the Polish recovery “is likely to gather momentum in 2003, but it will remain fragile”.

It says the promise of membership in the European Union and eventual adoption of the euro present “an historic opportunity to modernize the economy”.

“But much still depends on whether policymakers seize the opportunities presented by the recovery to rein in the fiscal deficit, press ahead with labour market reform, push the privatisation agenda, and address inefficiencies in the agriculture sector.”

The banking system has “responded appropriately” to the slowdown, the depreciation of the zloty and corporate weaknesses. The IMF says banks have restructured their operations aggressively.

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