Poland and the World Bank

Last updated
World Bank Logo World Bank logo.svg
World Bank Logo

After separating from the World Bank and other International Financial Institutions for decades due to pressure from the Soviet Union, Poland rejoined the World Bank on June 27, 1986. The World Bank was instrumental in financing and providing technical assistance for Poland as it transitioned from a Command Economy into a Market-Oriented Economy. As a middle income country, Poland has worked primarily with the International Bank for Reconstruction and Development since it is not eligible for loans from the International Development Association. Additionally, Poland has had a few projects with the Multilateral Investment Guarantee Agency and the International Finance Corporation. Currently, most of Poland's engagements with the World Bank Group concern environmental concerns and public finances.

Contents

Post Communist Transition

Despite being a founding member of the World Bank Group (WBG), Poland, due to pressure from the Soviet Union, did not withdraw loans from the WBG until the early 90s. [1] Once Poland began transitioning away from the Soviet network, the WBG and its sister organization, the International Monetary Fund, provided funds and technical advice to facilitate Poland’s transition into a free-market democracy.

The World Bank was an extremely important source of financing because foreign capital was skeptical of Poland’s political and economic stability and its transition to a capitalist economy necessarily entailed the scaling back of state-directed investment. [2] During the transition, the World Bank designed programs consistent with the International Monetary Fund’s contemporary macroeconomic principles. In 1990, the WBG dispensed the Structural Adjustment Loan (SAL). SAL was intended to support Poland’s Economic Transformation Program (ETP) which aimed to stabilize the economy, integrate Poland into the global financial market, and create the foundation of a market-oriented economy. SAL along with a series of loans that targeted narrower focuses like infrastructure and agriculture, supported the Polish government as it instituted “shock therapy.” [3]  Drawing heavily from the Washington Consensus, the ETP lifted price controls, liberalized imports, devalued the zloty, and employed restrictive credit policies.

In the WBG’s Performance Audit result, it found that SAL succeeded in restoring Poland’s credit worthiness, establishing the foundation of a market economy, and controlling inflation. Despite reporting these successes, the WBG raised concerns regarding Poland’s falling output, high unemployment, and growing inequality. Generally, Poland is regarded as one of the most radical Neoliberal reformers among the Communist successor states. [2] By 2000, Poland’s GDP was 127% that of its 1989 GDP which stands in contrast to other Communist successor states and their struggles.

Recent World Bank Engagements

As a consequence of Poland's relatively successful transition to the market, World Bank engagement with Poland in the 2000s was limited to efforts to wean Poland off of its reliance on coal: Green Investment Scheme, Coal Mine Closure Project, Poland Puck Wind Farm Project, etc. [4] After the Global Financial Crisis, Poland was one of the few countries that emerged without experiencing negative economic growth despite a general negative correlation between the extent of Neoliberal reforms and economic growth after the Global Financial Crisis for post-Communist states. [2] Consequently, Poland did not receive much attention from the International Financial Institutions since other members of the Eurozone were more adversely impacted.

Despite robust growth, the WBG and IMF are concerned that Poland’s aging population will portend an economic slowdown. [5] While the World Bank has worked on projects with the Polish government that focused on stabilizing public finances by cutting government debt, Poland's governing party, Law and Justice pledged to increase healthcare spending by 41 billion USD by 2024. [6] By comparison, healthcare spending was 21.3 billion USD in 2016.

Additionally, the WBG and Poland have worked together to alleviate pollution in Poland. Poland has 33 of the EU’s 50 most polluted cities which the NY Times attributes to its reliance on coal for energy. [7] In response, the World Bank has supported numerous clean energy, pollution management, and environmental projects in Poland. [8] Despite support from the World Bank, Polish citizens continue to suffer from the adverse effects of pollution. By the World Bank's own estimates, 25,000-50,000 Poles die prematurely from respiratory issues attributable to pollution. [9] Despite projects intended to expand alternative energy capabilities in Poland, 93% of Poland's energy is currently met by coal energy. [9]

Current World Bank Engagement

As of December 2019, Poland has two loans with the International Bank for Reconstruction and Development (IBRD). Both loans concern flood management along the Odra and Vistula rivers. Poland’s mountainous areas are particularly vulnerable to floods and floods devastated large swathes of Poland in 1997, 2006, and 2010. [10] The project aims to improve the government’s institutional response to flood and to provide it with ample infrastructure and technology to mitigate and predict the effects of potential floods. [11]

Interactions with the International Bank for Reconstruction and Development (IBRD)

Commensurate with its status as a middle-income nation, Poland is eligible for loans from the IBRD and not from the International Development Association. [12] As of 2019, Poland has had 53 projects with the IBRD with commitments totaling 16.2 billion USD. The IBRD has primarily worked with Poland in pollution management and environmental health, infrastructure services for private sector development, and the restructuring of state-owned enterprises.

Interactions with the Multilateral Investment Guarantee Agency (MIGA)

In 2010, MIGA issued guarantees which totaled 3.7 million USD to Dutch firm Linx Telecommunications and its Polish subsidiary Warsaw DC. [13] This guarantee covered risks such as civil disturbance, war, and expropriation. Through the establishment of a data center and expanding connectivity services, the project hoped to improving Poland’s Information and Communication technology, expand telecom networks, and boost local jobs. This has been MIGA’s only engagement with Poland.

Interactions with the International Finance Corporation (IFC)

Poland has had 7 investment projects, totaling 457 million USD, and 1 advisory project which totaled 5 million USD with the IFC. IFC engagement with Poland has focused on Poland’s financial services sector

Related Research Articles

The International Bank for Reconstruction and Development (IBRD) is an international financial institution, established in 1944 and headquartered in Washington, D.C., United States, it is the lending arm of World Bank Group. The IBRD offers loans to middle-income developing countries.It is the first of five member institutions that compose the World Bank Group. The initial mission of the IBRD in 1944, was to finance the reconstruction of European nations devastated by World War II. The IBRD and its concessional lending arm, the International Development Association (IDA), are collectively known as the World Bank as they share the same leadership and staff.

<span class="mw-page-title-main">World Bank Group</span> Group making loans to developing countries

The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. It is the largest and best-known development bank in the world and an observer at the United Nations Development Group. The bank is headquartered in Washington, D.C., in the United States. It provided around $98.83 billion in loans and assistance to "developing" and transition countries in the 2021 fiscal year. The bank's stated mission is to achieve the twin goals of ending extreme poverty and building shared prosperity. Total lending as of 2015 for the last 10 years through Development Policy Financing was approximately $117 billion. Its five organizations are the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID). The first two are sometimes collectively referred to as the World Bank.

The Multilateral Investment Guarantee Agency (MIGA) is an international financial institution which offers political risk insurance and credit enhancement guarantees. These guarantees help investors protect foreign direct investments against political and non-commercial risks in developing countries. MIGA is a member of the World Bank Group and is headquartered in Washington, D.C. in the United States.

<span class="mw-page-title-main">China and the World Bank</span> Overview of the relationship between China and the World Bank

China originally joined the World Bank Group (WBG) on December 27, 1945. However, after the Chinese Civil War, the World Bank recognized the Republic of China as its member, until the relationship ended in 1980, when the membership was replaced by the People's Republic of China. The People's Republic of China (PRC) did not become involved with the World Bank group until 1980, when it first joined the World Bank in April due to the market reforms known as reform and opening-up. Prior to the economic reform and its relation with the World Bank, according to CRS, "China maintained policies that kept the economy very poor, stagnant, centrally controlled, vastly inefficient, and relatively isolated from the global economy". Since its entry into the World Bank, China has transformed into a market-based economy and has experienced rapid economic and social development. Currently, although China has become the world's second largest economy with 1.4 billion population, it still has a close relationship with the World Bank in areas such as poverty, environmental protection and new challenges from the reform.

<span class="mw-page-title-main">Honduras and the World Bank</span>

The World Bank Group is a family of five international organizations that has provided leveraged loans and monetary assistance to the Central American country of Honduras in order to assist with the funding of critical tasks needed to ensure security of Honduran access to financing, expansion of social program coverage, and rural development. The country is the second poorest in Central America and its high poverty rate of 66% in 2016 has prompted an increased focus on the importance of diversification of rural income sources, quality education, and targeted social programs as a way of spurring economic growth.

<span class="mw-page-title-main">Uruguay and the World Bank</span>

Uruguay and the World Bank have been working together for a long time. This is because they both mutually benefit.

<span class="mw-page-title-main">Vietnam and the World Bank</span> Vietnams relationship with the World Bank

Vietnam joined the World Bank Group (WBG) on 21 September 1956. Before the mid-1980s, Vietnam was one of the world's least developed countries. A series of economic and political reforms launched in 1986, known as Đổi Mới, caused Vietnam to experience rapid economic growth and development, becoming a lower middle-income country. The World Bank (WB) has maintained a development partnership with Vietnam since 1993. As of 25 March 2019, it has committed a total of US$24 billion in loans, credits, and grants to Vietnam through 165 operations and projects, 44 of which are active as of 2019 and comprise US$9 billion. With an estimated extreme poverty rate below 3% and a GDP growth rate of 7.1% in 2018, Vietnam's economy continues to show fundamental strength and is supported by robust domestic demand and export-oriented manufacturing.

The relationship between Ethiopia and the World Bank was formalized on December 27, 1945.

In 1980, Djibouti became a member of the World Bank Group (WBG). The WBG includes five different organizations: the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID). Accounting for more than thirteen thousand projects across 173 countries, the WBG is one of the main lending facilities of the world. The WBG works together with governments and private sectors in order to enhance countries efforts towards development and poverty reduction.

<span class="mw-page-title-main">Croatia and the World Bank</span>

Croatia joined the World Bank in 1993, two years after declaring independence from the Socialist Federal Republic of Yugoslavia in 1991. The World Bank's projects from the mid-1990s to the mid-2000s primarily focused on infrastructural and environmental projects.

<span class="mw-page-title-main">The Democratic Republic of the Congo and the World Bank</span> The DRCs relations with the World Bank

The World Bank Group is a family of five international organizations, which has continuously given leverage loans and financial assistance to developing nations like the Democratic Republic of the Congo, commonly known as the DRC. The country has received assistance from the World Bank in the form of social programs in order to induce and sustain economic development. This assistance has been directed toward conflict prevention, investments in education, and addressing environmental degradation.

Myanmar is considered a lower-middle income state, and although there are areas in the country that are lagging there have been measurable improvements in terms of development since 2005. The World Bank's current strategy in Myanmar is to focus on rural development. Due to the conflict in the Rakhine area the World Bank Group (WBG) has increased its focus on social inclusion. Implementation of projects within Myanmar have increased access to electricity, schools, and healthcare. The current framework is laid out in the Myanmar Country Partnership Framework 2015-2019.

South Africa first formed a formal relationship with the World Bank on Dec 27, 1945 when it joined the International Bank for Reconstruction and Development, the first of the five financial pillars that compose the World Bank. Although South Africa was a founding member of the World Bank, its first loan agreement wasn’t signed until 1951, in the amount of $20,000,000. Since then, over 4.15 billion dollars has been approved for disbursement to South Africa from the World Bank in the form of loans to support a broad spectrum of development projects, with the majority of this funding currently allocated for projects in energy and resource extraction. South Africa’s voting power does not exceed 1% of the total voting power across the four composite institutions with voting authority that make up the World Bank Group.

<span class="mw-page-title-main">South Korea and the World Bank</span>

South Korea first joined the World Bank Group as a member in 1955. Over the years, South Korea manages to develop its economy in a successful and positive manner. The country now is a financial contributor to the World Bank to help other, rather than an aid recipient in the old days. Under the help and cooperation with the World Bank, South Korea became a rapid growth country in economy begin in the 1970s, and it now became a large shareholder of the institution to help out other developing countries.

Jamaica first joined The World Bank Group (WBG) on the 21st of February, 1963, when the island nation became a member of The International Bank for Reconstruction and Development (IBRD), which lends to middle and low income nations. This occurred the same month as Jamaica joining the International Monetary Fund (IMF), and one year after declaring political independence. Since joining The World Bank, Jamaica has received in excess of $3 billion US Dollars in loans and grants. Jamaican Minister of Finance, Donald Sangster, led the Jamaican delegations to World Bank and International monetary Fund meetings between 1963 and 1966, while also serving as Governor of the World Bank and IMF. Sangster would go on to serve briefly as the Prime Minister of Jamaica.

The Philippines' history with the World Bank started in 1945 when they became one of the first members of the International Bank for Reconstruction and Development (IBRD). Their first project with the Bank came in 1957 with the Binga Power Project. Since then, the Philippines has received $2.14 billion of disbursed loans from the IBRD. The Philippines is in the constituency entitled EDS 15, comprising Brazil, Colombia, Dominican Republic, Ecuador, Haiti, Panama, Suriname, and Trinidad and Tobago, and headed by Executive Director Fabio Kanczuk.

<span class="mw-page-title-main">Malaysia and the World Bank</span>

Malaysia's independence in 1957 was a catalyst for growth. As the nation took charge of managing its own affairs, it continued to develop the goals and means necessary for a financial structure conducive to the economic growth observed today. Critical to the transition of Malaysia from a low-income country to one of high-income status has been the expansion of its economy. From a commodity and agricultural-based economy, the Southeast Asian nation is transitioning to a leading exporter of more complex goods. As the nation opens up to trade and investment, the World Bank and the International Bank for Reconstruction and Development (IBRD) and International Development Association (IDA) continue to assist with its development.

<span class="mw-page-title-main">Kazakhstan and the World Bank</span>

Kazakhstan joined the World Bank in 1992 after it had gained independence from the in 1991. Kazakhstan has one of the fastest growing economies of all, and as a result had its classification changed from a lower-middle income state to and upper-middle income state in 2006. Because of this, Kazakhstan has begun to rely less on international financing as it had in previous decades; however, Kazakhstan still takes out loans from the world bank, primarily relating to the countries environmental issues.

<span class="mw-page-title-main">Belarus and the World Bank</span>

The World Bank Group is a large international financial institution that continuously provides loans and grants in order to fund capital projects in poor and developing nations across the globe. Its main goal is to reduce poverty worldwide. It consists of five other large international financial banks within in, each providing funding for different types of projects. Belarus joined the World Bank back in 1992 and has since then received over $2.5 billion in lending commitments since then and in the form of grant financing, it has received $31 million, with much of this funding going towards programs that include civil society partners. Currently, Belarus's active portfolio within the World Bank has a total of $933 million, with it containing a total of nine different projects, as well as two more projects that are currently still in preparation in the areas of energy efficiency and higher education. The majority of this funding has been directed towards the themes of pollution management and environmental health, climate change, and rural services and infrastructures, with the majority of the funding going directly into the central government, other agencies and extractives, and forestry sectors of the country, as well as sustainable energy. In looking to have more economic growth, improving the private sector environment within Belarus could help.

Ireland joined the World Bank on August 8, 1957, and has continued to be a member since then. A majority of the money loaned to Ireland from the World Bank was put towards infrastructure projects, such as power and education. Ireland was able to pay back these loans in the predetermined time frames with little to no issue.

References

  1. ↑ Winters (2016-05-12). "The International Politics of World Bank Lending to the Post-Communist Transition Countries" . Retrieved 2019-12-11.
  2. 1 2 3 White, Stephen, 1945- Batt, Judy. Lewis, Paul G., 1945- (2007). Developments in Central and East European politics. Palgrave Macmillan. ISBN   978-0-230-51737-0. OCLC   751630166.{{cite book}}: CS1 maint: multiple names: authors list (link)
  3. ↑ Bank, The World (1990-07-10). "Poland - Structural Adjustment Loan Project": 1.{{cite journal}}: Cite journal requires |journal= (help)
  4. ↑ "Projects". World Bank. Retrieved 2019-12-11.
  5. ↑ "Republic of Poland". IMF Staff Country Reports. 19 (37): 1. 2019-02-06. doi: 10.5089/9781484397503.002 . ISSN   1934-7685.
  6. ↑ "Poland's ruling PiS vows to boost public healthcare ahead of vote". Reuters. 2019-09-28. Retrieved 2019-12-11.
  7. ↑ Nabrdalik, Maciek; Santora, Marc (2018-04-22). "Smothered by Smog, Polish Cities Rank Among Europe's Dirtiest". The New York Times. ISSN   0362-4331 . Retrieved 2019-12-11.
  8. ↑ "Projects". World Bank. Retrieved 2019-12-11.
  9. 1 2 Air Quality Management in Poland. World Bank. January 2019. doi:10.1596/31531. hdl:10986/31531. S2CID   198425755.
  10. ↑ CYBERSKI, JERZY; GRZEŚ, MAREK; GUTRY-KORYCKA, MAŁGORZATA; NACHLIK, ELŻBIETA; KUNDZEWICZ, ZBIGNIEW W. (October 2006). "History of floods on the River Vistula". Hydrological Sciences Journal. 51 (5): 799–817. doi: 10.1623/hysj.51.5.799 . ISSN   0262-6667. S2CID   214652302.
  11. ↑ Bank, The World (2015-07-01). "Poland - Odra-Vistula Flood Management Project": 1–105.{{cite journal}}: Cite journal requires |journal= (help)
  12. ↑ "WBG Finances - Country Details - Poland". financesapp.worldbank.org. Retrieved 2019-12-11.
  13. ↑ "Linxtelecom Warsaw Data Center | Multilateral Investment Guarantee Agency | World Bank Group". www.miga.org. Retrieved 2019-12-11.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.