WARSAW, March 29 (Reuters) - Poland's finance ministry and central bank were at loggerheads on Monday over whether Warsaw needed to extend its Flexible Credit Line (FCL), a credit backstop with the IMF.
Last year, amid a raging global financial crisis and plummeting appetite for risk among investors, Poland applied for the FCL -- an instrument only available to well-run economies and aimed at shielding them from the fallout of the crisis.
The finance ministry has signalled it may want to extend the FLC, which it never used, while the central bank said on Monday it was not necessary, prompting the ministry to issue a statement disagreeing and fuelling a row between the two.
'The board of the National Bank of Poland is convinced that the situation in the Polish economy and in the financial system is currently so good that Poland can move from the group of countries, which are supported by the IMF to the group of those which, via IMF, support other countries in fighting the fallout of the global financial crisis,' a central bank statement said.
Deputy Finance Minister Dominik Radziwill said that Poland still needed the credit line because uncertainty over the global economy remained high.
'Today's economic situation in the world is much different from what it was a year ago but we are far from sustainable global growth. One must just point to the situation in Greece,' Radzwill said in a statement.
The finance ministry's press office said that there were no strict rules on applying for the FCL but that traditionally representatives of both the ministry and the central bank should sign a letter to the IMF.
AT ODDS
The ministry and the bank have also been at odds over the potential profit from the bank's 2009 profit, which according to the Polish law should land in state coffers some time in the middle of the year.
The government has forecast the payout to be about 10 billion zlotys while the central bank's head Slawomir Skrzypek suggested it could be less than a half that.
Skrzypek is a long-time political ally of Poland's President Lech Kaczynski, who is a staunch opponent of the government and a founder of the main opposition party, now led by his twin brother.
'It would be better if there were no such differences in views, which by the way, have also appeared in the past,' said Piotr Bielski, senior economist at BZ WBK bank in Warsaw.
'This does not help build Poland's credibility or the image that Poland's economic policy is ran coherently. It's not particularly optimistic but also it's not something that would shatter Poland's image at once too.'
The Polish bonds did not react to the statements from the finance ministry and the central bank.
The central bank also said in its statement it was 'ready to support the IMF as part of a bilateral loan and as part of the extended New Arrangements to Borrow (NAB) formula.'
In yet another statement the finance ministry said the measures the central bank proposed to meet Poland's obligations towards IMF, were 'inappropriate' as they could create significant liabilities for the state.
The NAB are credit arrangements between the IMF and a group of member countries and institutions to provide supplementary resources of up to about US$523 billion to the IMF to cope with threats to the international monetary system, the IMF says on its website.
(Writing by Kuba Jaworowski; Editing by Toby Chopra) Keywords: POLAND IMF/FCL (jakub.jaworowski@thomsonreuters.com; Reuters Messaging: jakub.jaworowski.reuters.com@reuters.net; tel. + 48 22 653 97 23) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
© 2010 AFX News
