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Poland Economic Policy Making in the 1990s
The presidential election at the end of 1990 and the
completely free parliamentary election one year later
revealed
widespread dissatisfaction among the population about the
hardships caused by the process of transformation, but not
about
its main direction. Campaigning politicians criticized the
stabilization policy severely and promised a better
alternative
to the approach taken by Finance Minister Leszek
Balcerowicz.
Election results, however, showed continued strong support
for
privatization and wide acceptance of the principles of the
stabilization program. The government of Prime Minister
Jan
Olszewski came to office in December 1991 promising to
ease the
burden the austerity program had imposed on society. A
particularly thorny political issue was the threat that
the
communist-installed system of social services such as
health care
and pensions, to which Poles had become accustomed, would
go
unfunded at reformed government spending levels.
Olszewski's
proposals of higher spending were rejected by the Sejm
(the lower
chamber of the parliament), however, on the grounds that
such
spending would cause an excessive budgetary deficit whose
effects
would overshadow any revival of economic activity. Shortly
thereafter the IMF warned that a proposed return of
agricultural
subsidies and price supports would increase the deficit
and
jeopardize the financial aid package of US$2.5 billion
that the
IMF had offered on condition of economic reform. IMF
disapproval
of the budget would also have ended aid in reduction of
the
national debt (over half of which was to be forgiven by
terms of
a 1991 agreement) and cut off foreign credits.
Because foreign funding was considered necessary to
counteract capital flight from Poland and finance the
national
deficit while encouraging private enterprise, the
government
revised its budget proposal. Its new austerity budget,
containing
a deficit of only 5 percent of GDP, was approved by
parliament in
early 1992, and the IMF expressed approval as well. On a
visit to
the United States in spring 1992, Olszewski reassured the
United
States government, the IMF, and the
World Bank (see Glossary)
that his government remained determined to transform and
stabilize the Polish economy.
Whatever the form of the coalition government, in 1992
effective political leadership was the most important
requirement
in dealing with the more intractable aspects of economic
reform
and balancing negative short-term effects with the
long-term
goals upon which most of Polish society still agreed. The
Olszewski government did not pursue vigorously the
expansion of
its coalition or full-speed economic reform. Olszewski's
fall
provided an opportunity for Hanna Suchocka, his successor,
to
reinvigorate the reform program in the second half of
1992.
Data as of October 1992
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