THE POLISH ECONOMY: PERFORMANCE UNDER MARTIAL LAW AND PROSPECTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00287R000501070001-0
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 33
• Document Creation Date: December 22, 2016
• Document Release Date: May 11, 2010
• Sequence Number: 1
• Publication Date: April 6, 1983
• Content Type: MEMO

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The Polish Economy: Performance U
Poland turned in a mixed economicperformance
in 1982 under the controls of martial law. Its
principal successes were ,a halt in the steep
three-year decline in industrial production and a
hard currency trade surplus of about $350 milli
with the West. At the same time, despite an
above-average grain harvest, agricultural outpu
dropped. Moreover, the state could not procure
enough grain for human consumption from private
farmers who were reluctant to conclude sales
agreements because of their own need for livesto
feed. Supplies of many foods and consumer goods
for sale in state markets declined. In contrast
to earlier years, Poland's CEMA allies were stingy
about providing aid, and despite a private bank
rescheduling, Poland fell further behind in
meeting its massive debt obligations to the
West.
The regime's successes were mostly the
consequence of tight controls on the populace and
the economy. The regime compelled people to work
by militarizing coal mines and other major
industries, would not allow protests against the
100 percent increases in consumer prices, and
closely regulated the allocation of scarce
industrial inputs.
This memorandum was prepared by
East European Division.,Office of
European Analysis. It was requested by William Milam, Director,
Office of Monetary Affairs, Department of State and Stephen
Canner, Director of E-W Economic Policy, Department of
Treasury. Comments and questions are welcome and should be
directed to Chief, East European Division,
Office of European Analysis,
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Poland faces another difficult year in
1983. Fulfillment of Warsaw's modest plans to
increase national income, agricultural production,
and industrial output will depend largely on the
country's ability to earn hard currency in order
to purchase vital Western imports. If Warsaw
imports the same level of goods--keeping
industrial imports as a priority--and runs the
same surplus in 1983 as in 1982, the country could
meet its industrial growth target. Continued
militarization of some enterprises, restrictions
on workers changing jobs, and extended working
hours in some factories will help. The regime may
not meet its moderate goals for agriculture,
however, because livestock herds declined late
last year and winter crop prospects are poor.
Poland's external financial problems will
become even more serious in 1983. Debt service,
including arrearages from 1982, will total more
than $13.9 billion in 1983 or about double the
level of current account receipts. Since the
outlook for new credits is poor and the Poles, at
best, will run only a $700 million hard currency
trade surplus, most of the amount due will have to
be covered by formal rescheduling agreements or
continuing toleration of arrears by Western
governments.
We believe that during the next three years
overall economic performance will recover some of
the ground lost since 1979-80, but that overall
economic performance will remain below the levels
of 1978, when the country recorded its highest GNP
in the Communist era. Moreover, the chances for a
return to the 1978 level of output by 1990 will
depend heavily on a number of factors that are
difficult to measure. On the plus side, Poland
possesses great amounts of underutilized human and
capital resources. It could make gains if
economic reforms are broadened and the Soviets
continue their assistance. A lack of sufficient
debt relief and Western credits, however, most
likely will be the greatest hindrance to economic
growth. Required debt repayments will not fall
much by 1990 and may even increase as
reschedulinqs push payments to the end of the
decade.
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In addition, the regime must contend with
deep seated worker distrust, bottlenecks in the
transportation and energy sectors, and inadequate
investment. Agriculture will remain a problem and
one disastrous crop--such as in 1980-,could
temporarily depress consumption to the levels of
the early 1960s. With these difficulties, living
standards will not quickly regain previous high
levels, helping to depress worker productivity
severely.
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The Economy Before Martial Law
The Polish economy was in an extremely weak position when
martial law was, imposed during December 1981. The level of GNP
declined gradually during 1979-80 and then dropped precipitously
in 1981. We estimate that real GNP fell 11 percent during 1979-
81; industrial production, 17 percent; and agricultural output,
16 percent. In 1981 alone GNP fell nearly seven percent--the
steepest drop in the postwar period--and industrial output
dropped 15 percent (see table 1). The economic decline in 1979-
81 was mainly the result of increasing external financial
pressures, chronic problems in the energy and transport sectors,
growing labor unrest, and a series of poor harvests. The
regime's failure at the same time to respond effectively to
mounting problems--by imposing a domestic austerity program, for
example--helped worsen the situation. While the supply of goods
declined in the state markets because of poor harvests,
production shortfalls, and the siphoning off of goods into the
black market, consumer demand grew because of increased wages and
high expectations. The dramatic decline in 1981 was caused by a
sharp drop in Western imports and investment (of 20 and 25
percent, respectively) largely due to a lack of Western credits;
an 18 percent decline in productivity; and a 5 percent reduction
in the length of the average workweek insisted upon by Solidarity
labor movement.'
External Financial Problems. During 1978-81, Warsaw's total
debt increased from $14 to $25 billion, and its annual debt
financing requirement mushroomed, amounting to $5.8 billion in
1978, $7.8 billion in 1980 and $10 billion in 1981. The country
ran annual current account deficits of about $2.75 billion from
1975 to 1980, and about $2.25 billion in 1981. Warsaw's
inability to increase hard currency exports deepened its
financial problems and it failed to secure enough new credits
because of increasing resistance by Western lenders. Unable to
cover its increasing debt service obligation, Poland in 1981 had
to reschedule debt payments with Western governments and
commercial banks. Poland's limited hard currency earnings were
used increasingly to service its burgeoning debt, but the
earnings fell far short of covering the financing requirement,
even after rescheduling.
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On the eve of martial law, Polish financial data
showed that the country needed total relief from its 1982
debt service payments of $10 billion and an additional $1 billion
to $2 billion in new loans. But, rescheduling talks with Western
governments and private banks had broken down, and Poland's major
sources of economic assistance were unwilling to extend much new
credit. West European governments were constrained by tight
budgets, commercial banks were unwilling to increase their
exposure, and Moscow was takin a tough stand in negotiating the
1982 trade agreement.
Industrial Output Down. After declining 1.0 percent
annually during 1979-80, industrial output plummeted 15 percent
in 1981. Shortages of Western industrial and raw materials due
to import cutbacks contributed greatly to the decline in
output. Imports of metallurgical and mineral products, for
example, fell by 18 and 15 percent respectively in 1979-80 and
then dropped again in 1981 by 53 percent and 35 percent each.
Imports of machinery and spare parts from the West declined by 30
percent in 1978-80 and by an additional 40 percent in 1981.
Increasing worker unrest--including intermittent strikes--in
response to deteriorating market supplies, poor working
conditions, and political grievances also contributed to the drop
in industrial production. We estimate that labor productivity
per worker stagnated during 1978-80 and then declined by 18
percent in 1981, partly because of the frequent, lengthy meetings
of workers to discuss union activities. Moreover, total hours
worked in industry in 1981 fell by 8 percent, largely because of
increased absenteeism and the government agreement with
Solidarity to reduce the work week.
The number of hours worked in the coal mines--which provide
the main source of both domestic energy and hard currency
earnings--dropped even more severely than other sectors in
1981. A government accord with Solidarity reduced the compulsory
work week for miners to 37.5 hours (4.5 hours below the national
norm) and eliminated overtime work on Sunday which, although
voluntary, had become virtually compulsory. Additionally, a
protracted dispute between Solidarity and the government over the
rules governing overtime work on Saturday and shortages of
consumer goods to buy with their earnings prompted many miners to
stay home on Saturdays. As a consequence, coal output fell 16
percent in 1981, and exports plunged to 15 million tons, com ared
to 31 million tons in 1980 and 41 million tons in 1979.
Agricultural Problems. In 1979-81 Poland experienced a
series of poor grain and potato harvests and a decline in
livestock production (see table 2). In addition to bad weather,
factors driving down output included the regime's continued lack
of investment in the agricultural sector and its vacillating
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policies toward the private farmer.2 Despite promises to support
private farmers, Warsaw's investment in agriculture averaged only
about 15 percent of total state investment during this period.
And in 1980 and 1981, when balance of payments problems caused
Warsaw to cut total investment sharply, investment in agriculture
dropped commensurately. Moreover, the regime continued to
discriminate against private farmers, refusing to sell them land
and inputs and charging them higher prices than state farms.
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Warsaw imported between 5 and 8 million tons of grain and
fodder annually during 1978-81 to try to satisfy domestic
demand. The value of these imports, financed mainly through
credits, grew from $700 million in 1978 to $1.2 billion in 1981,
and added to the debt. The quantity of meat available in state
retail markets, however, did not keep up with growing consumer
demand and even fell 20 percent in 1981. Farmers preferred to
sell meat at higher prices in the black market rather than to the
state.
Consumer Problems. While output dropped in the industrial
and agricultural sectors, state retail markets were in increasing
disarray in 1979-81, and by the end of 1981, had virtually ceased
to be an effective system for the distribution of goods. Workers
opposed government plans to strike a better balance between
supply and demand by raising some retail prices. Regime attempts
to raise meat prices in July 1980 provoked a series of strikes
nationwide that eventually led to the creation of Solidarity.
The new union imposed additional strains on the economy by
successfully demanding large pay increases, thereby increasing
consumer demand and inflationary pressures. Retail supplies of
food, meanwhile, dropped because of poor harvests and failure of
imports to cover the gap. Availability of foods in state stores
further declined because farmers increasingly ignored delivery
contracts with the state and sold their goods instead on
lucrative black markets. The imbalance between supply and demand
caused long food lines, panic buying, and beginning in 1981, meat
rationing. The black market in consumer goods and foods grew
enormously; by 1981, according to government estimates, about 25
percent of total meat supplies was sold through the black
market. There was increased speculation in Western currencies as
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consumers sought to buy more goods in regime-sponsored hard
currency stores. During 1981, the dollar value of the zloty on
the black market was only 5-7 percent of its official rate of
exchange: 450-600 zlotys per dollar versus 30 zlotys to the
dollar.
Inadequate Policy Measures. During 1978-81, the authorities
failed to formulate a stabilization program that could bring the
deteriorating external financial situation under control or to
find solutions to major domestic economic problems. The regime's
draft economic plan in 1981 was so inconsistent--some industrial
and export goals, for instance, were set at ridiculously high
levels in light of available resources--that it was rejected by
parliament and revised substantially before its eventual
passage. The regime reduced industrial imports from the West by
12 percent in 1979-80 and 40 percent in 1981 and it cut back
investments by 19 percent in 1979-80 and 22 percent in 1981. It
failed, however, to relieve transportation and electric power
bottlenecks, alleviate supply problems in agriculture or industry
and close the gap between supply and demand in the domestic
market. Subsidies of artificially low food prices grew annually,
comprising 25 percent of the state budget by 1980.
Instead, the regime often implemented policies that were
piecemeal and ineffective. According to the Polish press, some
of the import cuts were made arbitrarily, and production
sometimes stopped for lack of an inexpensive part. The regime
kept pouring funds into some ill-considered industrial projects
throughout 1979-80. For example, work continued on the huge
Katowice steelworks even though the site lacked adequate
transportation and a skilled labor force.
An experimental economic reform introduced in January 1981
cut in half the number of central regulations imposed on
enterprises and expanded enterprise decisionmaking in areas such
as setting wages. These reforms, however, were successfully
ignored or even abused by many managers. Some enterprise
directors, for example, refused to link wages to production
levels at a time when output was declining because of raw
material shortages. Instead, wages often increased without
regard to productivity. Additionally, some plant managers were
confused about the timetable for implementing reform measures,
and thq central authorities were reluctant to give up their
power.'
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The Martial Law Record
The martial law regime scored some important economic
successes during its 12 months of rule (see table 2). The
government halted the decline in industrial production, and ran a
hard currency trade surplus of about $350 million,' mostly
because of tough martial law controls on the populace and the
economy. The regime used the sweeping powers granted it by the
martial law decree to militarize the coal mines and other major
industries, forcing workers to comply with management orders as
in wartime. The traditional, longer workweek was reimposed, and
workers who stayed away from the job or who caused problems were
subject to jail sentences or other penalties imposed by military
tribunals. The number of "operational programs" which centrally
allocate scarce resources to key industries, increased to cover
over 50 percent of industrial output.
According to Polish statistics, the consumer austerity
program imposed under martial law reduced living standards
significantly, with the index of retail prices increasing over
100 percent and real wages dropping about 23 percent. Real
investment was further cut by 20 percent. These austerity
measures helped the regime reduce imports from the West by 23
percent and increase hard currency exports by 4.0 percent on a
customs basis. The measures may have also helped the Poles
obtain better rescheduling terms from private banks than in 1981,
including a recycling of one half of their interest payments--
about $500 million--in the form of short term credits. At the
same time, the refusal of Western governments to negotiate a
rescheduling agreement with Poland--because of the imposition of
martial law--provided Warsaw some important de facto debt
relief.
The regime also encountered some important failures. In
part, because it did not garner any significant popular support,
labor productivity remained depressed. Agricultural output
dropped more than 4 percent, and demand for food and manufactured
consumer goods still outstripped supplies. The amount of goods
4 Polish data on foreign trade differ substantially. Payments
data, most relevant for analysis of the external financial
position, show a surplus of $350 million. On a customs basis,
the surplus in trade with the West was more than $1 billion.
Customs data more accurately reflect the flows of goods in and
out of the Polish economy. We have not been able to explain the
large discrepancy.
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for sale in state markets decreased by 17 percent mainly because
of the fall in production of consumer goods and food. Unlike
1981, the black market did not play a key role in distribution.
In particular, difficulties in procuring grain from private
farmers raised the possibility of bread shortages and prompted
the regime to use precious hard currency to import additional
supplies. The government made little progress in decentralizing
economic decisionmaking as provided for in its reform program,
largely because central controls were tightened under martial
law, but also because of resistance from party and government
officials. Moreover, despite the private bank rescheduling the
Poles fell further behind in meeting their massive debt
obligations to the West.
Industrial Output Stabilizes. Despite the sharp cutback in
imported supplies, overall industrial productjon in 1982 declined
2 percent from the 1981 level (see figure 1). Results differed
sharply among industrial sectors, with the extractive industries
increasing output by 11 percent while manufacturing output
dropped 3 percent. The regime's greatest success was in boosting
coal production by 16 percent over 1981, with output reaching 189
million tons, compared to 163 million tons in 1981. We believe
the regime was able to break the coal bottleneck by:
o establishing a mandatory six day workweek,
o militarizing the sector and imposing harsh penalties for
absenteeism and strikes;
o increasing the labor force by recruiting more civilian
workers and deploying soldiers to the mines;
o granting huge wage increases, which raised miners'
incomes to more than twice the industrial average; and
o providing miners with greater supplies of consumer goods
and foodstuffs, including larger meat rations.
Production in other mining industries also increased in 1982
mainly because their output was not dependent on Western
imports. The Polish press reported that the output of copper ore
was 4 percent above the 1981 level, while the production of
lignite, lead and silver also surpassed the previous year's low
level. Over half of copper and silver production was exported,
mainly to the West.
We believe Polish officials are correct in claiming that the
drop in manufacturing output in 1982 stemmed largely from
shortages of Western inputs. A decline in imported grain and
other agricultural products from the West in the first three
quarters of 1982 compared to the same period in 1981 contributed
5 Statistics used in the compilation of all tables are directly
from or based upon official Polish data.
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to a 38 percent drop in fodder production. Production in the
electrotechnical and transport sectors declined 14 and 20
percent, respectively, as Western imports of machinery and spare
parts fell over one-third. Output of the textile and leather and
shoe industries dropped by about 15 percent each, while Western
imports for light industry declined 45 percent (see figure 2).
Shortages of skilled labor in some industries exacerbated
production problems. The overall number of industrial workers
dropped five percent during 1982 compared to 1981 because of new
liberal early retirement policies which were sassed by the regime
in 1981 at the initiation of Solidarity.
Agricultural Output Drops. According to Polish statistics,
overall agricultural output decreased 4.5 percent in 1982
compared to 1981. Crop output was down 3.3 percent while output
of livestock products fell 5.8 percent. Largely because of
favorable weather Poland had a good grain crop of 21 million
tons--7 percent more than in 1981 and 9 percent greater than the
average crop over the last five years. But output of the three
major non-grain crops dropped below 1981 levels. The harvest of
potatoes--an important livestock feed--was 25 percent below the
previous year, while production of rapeseed--a source of
vegetable oil--and sugar beets was 12 percent and 5 percent less
respectively than in 1981. Meat production was 0.3 percent less
than in 1981, egg production declined 14 percent and milk output
fell 1 percent.
There was a temporary gain in the size of livestock herds at
mid-year, because of increased breeding in the fall of 1981 in
anticipation of continued high black market prices.
Opportunities for black market sales diminished, however, with
the imposition of martial law, and farmers responded to the low
state procurement prices and increased fodder shortages by
slaughtering more livestock, especially in the last 6 months of
1982. Because of the farmers' actions, the state fulfilled and
in some months even surpassed its procurement needs for livestock
in late 1982. According to Polish statistics, the number of
cattle and hogs at the end of 1982 was lower by 4 and 8 percent
respectively, than in December 1981, and the number of sows was
down 25 percent.
Despite the good grain crop, the government encountered
problems in procuring satisfactory amounts of grain for human
consumption through official retail channels. By December, the
state had purchased only half of its planned procurements and
consequently lowered its estimated total grain purchases from
farmers in the 1982-83 marketing season (July 1982-June 1983)
from 5.0 to 3.5 million tons. Grain sales were negligible in the
last quarter of 1982 even though the regime tried to raise
procurements by increasing the amount of coal that farmers could
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buy in exchange. At the same time, the regime reduced the amount
of coal farmers could get for livestock sales.
We believe that, if the regime's policies toward agriculture
had been more consistent, the sector might have performed
better. To win farmer support, the government liberalized
inheritance and pension laws and increased the upper limit on the
size of private farms. It severely undermined these positive
steps, however, by threatening to impose compulsory procurements,
especially early in 1982, when military teams were sent to the
countryside to inventory grain stocks. Furthermore, the farmer
was subjected to the government's austerity program: state
procurement prices for farm products rose an average of 21
percent in 1982 while the cost of farm inputs increased by 36
percent and farm services, such as veterinary help and tractor
rentals, rose by 330 percent. The regime estimates that the real
income of private farmers decreased by at least 20 percent in
1982. many farmers were
disgruntled over the decline in real income, blamed the
government for shortages and high prices of inputs, and
the prospects poor for private agriculture in Poland.
consider
Consumption Drops. The government enacted a severe consumer
austerity program in 1982. Retail prices--which had been held
relatively stable for a decade despite the jump in money incomes-
-were boosted sharply in February, and enterprises were allowed
to increase prices of many consumer goods throughout the year.
Polish statistics show that in 1982 overall retail prices
increased by over 100 percent compared to the previous year,
while the average wage, including compensation for the price
hikes, grew 55 percent. For the year as a whole, real wages of
workers declined about 23 percent below 1981 and per capita
consumption of goods fell by 13 percent--to roughly the 1972
level. Supplies in the state markets declined 18 percent in 1982
while overall state retail sales (at constant prices) dropped 17
percent (food sales declined 16 percent, other consumer goods 22
percent). Market supplies of meat and fish fell 14 percent each,
poultry 64 percent, coffee 17 percent and spirits 12 percent
during the first nine months of 1982 compared to the first nine
months of 1981. The amounts of wool textile goods for sale in
state markets declined by 44 percent from 1981 levels, shoes 14
percent, passenger cars 15 percent and refrigerators 13 percent
(see table 3). Rationing continued, and at the end of 1982
rationed items accounted for 70 percent of food sales and 30
percent of consumer goods sales.
The price hikes in February 1982 helped for a short time in
balancing supply and demand. But inflationary pressures grew
again because of increases in wages and social benefits,
including wage hikes granted by some enterprises late in 1982
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exercising their new freedoms under the regime's economic reform
legislation. The Polish press reported that the amount of cash
and savings held by the populace, which had fallen from an
equivalent of 6 months personal income at the end of 1981 to 4
months in June 1982, grew steadily in the latter half of the
year. Polish economists estimate that the purchasing power of
the population still exceeded the supply of goods and services by
15 percent at the end of 1982, about the same as a year earlier
despite the temporary narrowing of the gap after the price
increases in February.
The price increases had an uneven impact on different
segments of the population. Polish press articles claim that a
small group of people--private businessmen, speculators,
artisans, and professionals--still had considerable purchasing
power. On the other hand, many Polish officials believe the
average Polish worker has experienced acute economic hardships
because of price increases. A government study in late 1982
found that because of high prices 27 percent of the families
surveyed did not purchase their meat rations, 34 percent did not
buy their allotment of flour and grain products, and 27 percent
abstained from their ration of liquor and cigarettes. Some
Polish priests in December 1982 reported an even bleaker year,
estimating that 40 percent of their parishioners' ration cards
for basic foodstuffs were unused each month because of high
prices. Pensioners were especially hard hit: the regime
estimates that the cost of living for the elderly increased 115
percent in the first six months of 1982 compared to the previous
year, while benefits rose only 36 percent.
The housing shortage also worsened in 1982, according to
Polish officials, mainly because of the scarcity of construction
machinery and raw materials and the low productivity of
workers. Polish statistics indicate that housing construction
dropped from 278,000 units in 1979 to 120,000 in 1982. The
regime announced that in mid-1982 two million people were waiting
for apartments compared to 1.7 million at the beginning of
1981. The estimated waiting time for a newly married couple to
get their own apartment or house--15 years in the 1970s--has
stretched to 20 years, while the wait for home furnishings ranges
from 2 to 3 years.
Economic Reform Stalls. Under martial law, the regime made
little progress in implementing economic reform. As outlined in
the Polish press in mid-1981, the reform tried to stimulate
efficiency and growth by granting enterprises new freedom to make
decisions on production, investment, and hiring. Enterprise
behavior is to be guided primarily by market forces, with the
central authorities maintaining control through the use of taxes,
interest rates, and other financial instruments. Under the
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reform, profitability is to be the major criterion of success:
unprofitable enterprises would be denied bank credit for
operations or investment and ultimately would be forced to close,
while profitable firms would be able to borrow and expand.
Workers would have a major voice in enterprise decisions through
independent workers' councils and trade unions. Wage hikes would
be linked to increases in productivity of the individual
worker. While the retail prices of most necessities would be
centrally controlled, the majority would be set by the enterprise
taking into account world prices.
Although parts of the reform were implemented in January
1982, the measures were severely undercut by the regime's tight
martial law controls and its cautious approach to making
changes. The regime increased central controls over much of the
economy by appointing military commissars to run the more than
200 militarized large factories and by expanding an existing
network of special plenipotentiaries to supervise the production
of vital goods. Using "operational programs," devices for
centrally allocating scarce resources, these plenipotentiaries
began to control the movement of more than one-half of industrial
output, virtually all Western imports, and 22 critical domestic
industrial inputs, including coal and electricity. Enterprise
managers scrambled to belong to an operational program in order
to obtain necessary inputs. Meanwhile, most factory production
goals continued to be set by the Planning Commission on a
quarterly or even monthly basis.
The martial law government's cautious approach to reform
often perpetuated old central administrative controls in new
forms. For example, the plenipotentiaries maintained control
over factories in much the same way as the industrial
associations--a middle layer of planning and management that
exercised significant control over groups of factories--which had
been abolished in 1981. Moreover, the plenipotentiaries usually
were former association heads and often performed their old
duties using the same office space and staff. Meanwhile, the
regime allowed factories to form new voluntary associations, and
these bodies continued to wield significant powers. According to
a Polish official, ministries relied heavily on the new
associations to relay orders to enterprises; many factories
joined in the associations because they preferred taking orders
to taking initiative. According to a Polish economist, the
associations provided many factories shelter from the economic
pressures let loose by reform. The associations could shift
profits among member enterprises, allowing highly profitable
firms to avoid steep taxes and permitting unprofitable ones to
escape heavy penalties.
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The government also failed to implement fully key measures
regarding the reform of producer prices and factory self-
financing. Central planners were concerned about intensifying
inflationary pressures and permitting some firms to earn
exhorbitant profits while forcing others into bankruptcy. The
government generously subsidized factories that were denied bank
credits, allocating 46 percent of the national budget or 1.2
billion zlotys, for this purpose in 1982. As of late March 1983,
eleven enterprises had been closed because of financial
difficulties. Moreover, government efforts to prevent unusually
high factory profits caused other problems. To counter
profiteering, the government levied a number of new taxes on
enterprises--including a progressive income tax ranging as high
as 90 percent--that seriously weakened the profit incentive. As
Polish economists have pointed out, the failure to reform
producer prices or to discontinue subsidies has made it difficult
to determine which firms are really profitable.
Some reform measures, in our estimation, were poorly
formulated and had negative side effects. Planners, for example,
had assumed that enterprise interest in maximizing profits would
prompt them to eliminate excess labor. To facilitate this
process and to avoid large-scale unemployment, the government
instituted a liberal early retirement program in early 1982. As
a consequence almost 500 thousand workers--many of them highly
skilled--retired in the first six months of the year. The
economy began to suffer from what we believe are real shortages
of skilled labor, despite the low level of economic activity
compared to earlier years. In late 1982, there were more than
300 thousand job vacancies--about 100 thousand more than the
previous year--and many managers complained that shortages of
labor were more of a constraint on production than shortages of
materials. Enterprises continued to hold on to some redundant
labor, however, partly because the new tax regulations allowed
enterprises greater profits if they had large numbers of low
salaried workers.
The regime has not been willing to grant significant powers
to its newly-formed trade unions and workers' councils, largely,
in our view, because of its concern about maintaining control in
the wake of the Solidarity experience. In January 1983, the
government retracted an earlier pledge to consult with the trade
unions on procedures for allowing workers a larger voice in the
selection of factory directors. Instead, it unilaterally
published a list of 1,400 enterprises where directors would
continue to be appointed by the state. The law on workers'
councils is similarly restrictive, providing for the abolition of
councils that violate "basic social interests" and suspending the
right of workers' councils to appeal decisions concerning the
enterprises. In any event, many workers are refusing to
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participate in the councils or the unions. According to Deputy
Premier Rakowski, in January 1983 the courts had registered 4,000
new factory unions, but only 10 percent of the workers in
socialized industry had joined the organizations. Only 40
percent of enterprises had reactivated workers' councils.
Trade and Payments with the West. The Polish financial
crisis continued in 1982 as the regime failed to cover most of
its debt service requirements despite a trade surplus (see table
4). According to Polish statistics, imports from the West on a
customs basis declined 23 percent, and exports increased 4
percent in 1982, boosting the trade surplus to $1.4 billion,
compared to $26 million in 1981. Imports were purposely cut by
the regime to cover repayments required by the bank
rescheduling. Polish officials claim, however, that the purchase
of imports was hindered because they were forced to pay cash
immediately for goods, but did not receive immediate payment for
exports because it extended normal short term trade credits.
Polish statistics bear out this claim, showing a $800 million
surplus with the West on a customs basis in January-June 1982 but
only a $100 niillion surplus on a payments basis.
Imports of food, other agricultural goods, and raw materials
fell drastically in 1982. The volume of investment imports
dropped 47.5 percent, production imports fell 11.4 percent and
imports for the domestic market declined 11 percent. Grain
imports--mostly from the West--declined from 6.8 million tons in
1981 to 4.1 million tons in 1982. The large jump in coal
exports-from 7.9 million tons in 1981 to 16.0 million tons in
1982--and smaller increases in copper and coke sales were offset
to a great extent by substantial drops in exports of zinc,
consumer goods, and food.
Poland failed to make good on threats to redirect trade from
the West to socialist countries in retaliation for Western
sanctions. According to Polish statistics, Warsaw sent 54
percent of its exports to socialist countries in 1982 compared to
59 percent in 1981. Poland received 64 percent of its total
imports from these countries in 1982 compared to 65 percent in
1981. The Poles were not able to increase the share of imports
from socialist countries because many Western inputs did not have
substitutes in CEMA countries. Warsaw probably increased the
share of exports to the West to import hard currency goods and
pay financial obligations.
Warsaw owed Western creditors $11.2 billion--nearly twice
the value of its exports. Its obligations included $9.8 billion
in debt service due in 1982 under original loan contracts and
$1.4 billion in unrescheduled obligations carried over from 1981
and payments due under 1981 debt relief agreements concluded with
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private and government creditors. Poland was able to pay only
about $2.2 billion, and reschedule less than $3 billion leaving a
financial gap of some $6-$7 billion. According to Polish data,
the regime was granted $1.7 billion in credits including $1.5
billion of Western guaranteed credits and ran a $700 million
current account surplus exclusive of interest. An agreement with
private banks rescheduled 95 percent of 1982 principal
obligations--worth $2.3 billion--and required Poland to pay $1.1
billion in 1982 interest in three installments--19 November, 20
December, and 20 March 1983. The banks agreed to provide Warsaw
with one half the value of interest payments in short-term
credits. [
Poland ignored payment of any debt service due to Western
governments in 1982 and paid very little of the interest due
under the 1981 Paris Club rescheduling agreement. Warsaw
justified its nonpayment by citing the government creditors'
refusal for political reasons to discuss debt rescheduling. For
most of the year, Poland pressed Western government creditors to
open debt rescheduling talks. Poland, however, ended the year
with $4.4 billion in arrears to Western government creditors and
limited prospects for a government rescheduling in 1983. Given
the creditors' desire to receive a net flow of Polish payments,
Warsaw is unlikely to get the rescheduling terms and new credits
it wants from the governments.
Less Aid From the East. Poland continued to receive
economic aid from the USSR and the other CEMA countries in 1982,
but this assistance was less than in 1981 and did not compensate
for reduced Western inflows. According to Polish press reports,
Moscow in 1981 allowed Poland to run the equivalent of a $2
billion trade deficit, extended $1 billion in hard currency
loans, and permitted the refinancing of previous ruble loans. In
1982 the Soviets allowed Warsaw to run a soft currency trade
deficit equivalent to $1.2 billion and supplied only about $44
million in hard currency to buy Western parts for ships and cars
destined for export to the USSR. The Soviets continued to sell
raw materials to Poland at more favorable prices than in the West
(for example, crude oil at price 40 percent lower than they could
have earned in the West). They also loaned Poland 500 thousand
tons of wheat, corn, and rice and provided above-plan deliveries
of raw and semi-finished materials equivalent to $150-200 million
to boost production in idle factories. The latter provision,
although helpful to the Polish economy, cannot be considered
entirely as aid since the Poles paid for these materials by
shipping to the USSR a large part--at first 85 percent,
subsequently 50 percent--of the factories' output.
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We believe the lower level of hard currency aid reflects
Soviet efforts to stabilize their own hard currency position
while helping the Poles avoid economic collapse. Various reports
indicate that Moscow had threatened even more severe cutbacks in
1982 aid during trade negotiations in the fall of 1981. At that
time, perhaps out of chagrin over trends in Poland, Moscow warned
that trade would have to be brought into balance in 1982. We
believe that this hardline position may have been a negotiating
tactic intended partly to encourage the regime to take stronger
actions against Solidarity. After the imposition of martial law,
the USSR agreed to let Poland run a larger deficit than actually
incurred in 1982. The deficit was less largely because Poland
cancelled imports of Soviet machinery destined for defunct Polish
investment projects (see figure 4).
The non-Soviet CEMA countries provided Poland only
negligible aid in 1982. Warsaw's trade with its East European
allies was roughly in balance, but according to the Polish press,
some East European countries, such as Bulgaria and Hungary, did
provide Poland with small amounts of hard currency to buy Western
inputs for products exported to their countries. East European
promises to help Poland complete major investment projects,
probably in return for a share of potential output, had made
little headway as of the end of 1982, according to Polish press
reports. Hungary had volunteered to finish 15 projects, Romania
5, Bulgaria 5, and Czechoslovakia 7.
Prospects For 1983
Poland faces another difficult year in 1983. The
government's preliminary plans call for a 2.0 to 2.5 percent
growth in national income and a 4 percent growth in industrial
production--goals which, even if achieved, would recover only one
fifth of the decline since 1978. Coal production is slated to
remain at the 1982 level, but production of other raw materials
for industry is scheduled to increase. Polish planners foresee
growth in agricultural production of almost 2.3 percent in 1983,
even though livestock production is expected to fall. The regime
apparently intends to try to hold purchasing power roughly
constant this year: retail prices are scheduled to increase 15
percent. while wages are expected to increase 15 to 16 percent.
Warsaw's success in achieving its national income and
industrial production goals this year will depend heavily on how
the regime distributes its scarce hard currency earnings between
payment of debt obligations and purchase of necessary Western
imports. If Poland imports the same level of goods--keeping
industrial imports as a priority--and runs the same surplus in
1983 as in 1982, the country could meet its industrial growth
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target. On the other hand, if policymakers choose to pay more of
Poland's debt service obligations by running a larger trade
surplus than in 1982, the import cuts needed to run a larger
surplus would result in growth below projected targets.
Fulfillment of the industrial plan will be helped by the
government's extension of the workweek to 46 hours in key
enterprises and its encouragement of overtime in factories with
sufficient raw materials. Continued militarization of some
enterprises and restrictions on changing jobs may also help boost
output.
The planned growth in agriculture, however, will be
difficult to attain because of continued declines in livestock
numbers and unfavorable winter crop prospects. Polish officials
have said that because of bad weather last fall, much of the
winter crop--normally 60 percent of total grain production--will
have to be resown in the spring, thus reducing yields. We
believe the government will continue to have problems procuring
grain from private farmers because farmers are keeping the grain
to feed their own livestock. Polish officials have already
pledged to fill the supply gap by buying Western grain, most
likely by using barter deals and short-term credits available
through the 1982 rescheduling agreement.
We believe consumers will experience a further erosion in
their living standards in 1983 because supplies of meat, milk,
eggs, cheese, and grain products will probably decline below 1982
levels. Although Polish officials claim that rationing of some
food items will be phased out this year, meat will continue to be
rationed. The regime estimates that meat consumption will fall
in 1983 below the average 55 kilograms per capita consumed in
1982 (far below the 74 kilograms per capita consumption in
1980). Furthermore, the gap between supply and demand is
expected to widen in 1983. Despite the limited supply of
consumer goods, the regime plans to impose only minor price
increases while allowing wages to rise by about 15 percent, which
will not reduce the large money holdings.
The Soviet Union has promised to permit Warsaw to run a
trade deficit equivalent to $1.7 billion this year compared to
$1.2 billion last year. By the end of 1983, according to the
Polish press, Poland's debt to the USSR--mostly in rubles--will
total close to $7 billion. Moscow has also pledged major
concessions in the structure of trade, allowing Poland to export
to the USSR more machinery and fewer consumer goods and
foodstuffs desperately needed at home, while increasin b 15
percent the amount of Soviet raw material deliveries.
Warsaw will continue to have problems in meeting its debt
repayments to Western banks and governments in 1983. The huge
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carryover of arrears from 1982 will leave Warsaw with $13.9
billion in debt service due this year, including:
o $4.4 billion in arrears from 1982.
o $5 billion in principal payments due this year on
medium- and long-term loans under original loan
contracts.
o An estimated $3.8 billion in interest, including charges
on rescheduling agreements.
If the Poles run a current account surplus (excluding interest)
of about $1.0 billion in 1983, as planned, Warsaw would have a
$12.9 billion financing gap. Since the outlook remains poor for
new credits, the financing requirement presumably would continue
to be covered by debt relief, either under formal agreements or
by creditors' continued tolerance of arrears.
Warsaw's projected payments capacity will be virtually
exhausted if it covers obligations due under the 1981 and 1982
rescheduling agreements. In 1982, Warsaw placed highest priority
on meeting payments called for under the 1981 agreement and made
the payments more or less on time. Making timely payments may be
more difficult this year, if only because Warsaw will have to
spend about $400 million more to service both the 1981 and 1982
rescheduling agreements. On the other hand, the amount of
principal payments to banks to be rescheduled in 1983 is $1.2
billion less than last year, and interest on unrescheduled debt
will be lower because of expected lower interest rates and
reduced amounts of exposure not covered by debt relief.
Warsaw owes Western governments some $7 billion this year
including 1982 arrears. If Western governments decide to provide
debt relief, Warsaw will ask them to reschedule obligations for
the rest of the 1980s. Some governments are anxious to
reschedule so that they can receive at least some payments, but
the Poles probably would ask for total or near-total debt relief
plus billions of dollars in new money as well. At best, the
governments would compete with the banks for what promises to be
a very limited amount of hard currency available for debt
service.
Longer-Term Prospects for Recovery
Polish officials have not yet agreed on all the specific
growth targets in the economic plans for 1983-85 and 1986-90.
The Sejm, however, approved preliminary guidelines in December
1982 which call for moderate economic growth. The tentative
1983-85 plan--which undoubtedly will change--calls for real
national income to grow 13 percent by 1985 compared to 1982;
industrial production, 15 percent; agricultural output, 10
percent; and consumption, 11 percent. Investment, however, will
remain stagnant at the low levels of 1982. Judging by Polish
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press reports, planned consumption levels may be adjusted upward
in the final plan because of pressure from the discontented
populace. More goods for the marketplace, however, would mean
less for exports. Growth targets in the period 1986-90 still are
being debated.
Perhaps the most important roadblocks to economic growth are
Warsaw's external financial problems and its inability to obtain
Western credits. The regime must also contend with deep-seated
worker distrust, and a legacy of poor investment decisions and
inadequate adjustment policies. It faces a continuing imbalance
between supply and demand, inefficient government and industrial
bureaucracies, and bottlenecks in production capability, energy,
and transportation. Agricultural production and food
distribution seem likely to remain serious problems, leaving the
level of consumption, particularly in urban areas, highly
vulnerable to crop fluctuations. Even under the most optimistic
assumptions, living standards will not improve enough to regain
previous levels soon, or to spur worker productivity.
Some Positive Factors
Despite the severity of Poland's economic ills, the country
has many basic assets necessary for regaining economic health.
It has achieved a 98 percent literacy rate and developed a
skilled labor force that ranks tenth in the world in the numbers
of scientific and engineering personnel per 100,000 people.
Poland possesses abundant deposits of copper and sulfur, in
addition to coal; its' capital stock was substantially updated
through Western imports during the 1970s. If key industrial
inputs were available and Polish workers better motivated,
economic activity could rebound quickly from its current
depressed rate.
Two other factors--economic reform and Soviet assistance--
could provide important boosts to the economy, although there is
good reason to doubt that the benefits will be as great as the
Poles may hope. Economic reforms, if implemented consistently
throughout the economy, could aid economic growth in a variety of
ways. For example, linking wage increases to productivity and
allowing firms to retain profits--as the proposed reform calls
for--could boost production and stabilize market supplies.
Regime support of Western investment in Polish firms, especially
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those run in Poland by expatriate Poles6 could also lead to
improved market supplies, investment, and hard currency
exports.
We doubt, however, that major portions of these reforms will
be implemented anytime soon. As of early 1983, more than a year
after the reforms were inaugurated, over 25 percent of the
economy still is under tight central control and some sectors,
such as coal mining, are still militarized. Furthermore, the
authorities are reluctant to allow prices to rise enough to
absorb excess purchasing power or to link wages to productivity
because of concern over worker reaction. Additionally, Polonia
firms recently have been denounced in the Polish press for
excessive profit making, and some officials have urged that
restrictions be put on their operations.
Even if the bureaucracy were not resistant to change, the
authorities probably would be cautious about implementing
economic reform more vigorously because of the likely disruptions
to the economy. Material shortages could be exacerbated, for
example, during the initial phase of shifting toward a more
market-oriented system. Moreover, new policies might be ignored
or be incorrectly interpreted by incompetent managers, adding to
problems in communication among factories and with the ministries
or the national bank. Productive working time in factories might
also drop because of discussions of new policies between managers
and workers. Moreover, enterprises--working under the reform's
definition of profitability--might well continue to raise prices
rather than output, as they did in 1982 despite regime attempts
to moderate price increases.
Although the USSR may continue to provide fuels and raw
materials to Poland under more favorable conditions than offered
to other Warsaw Pact countries this year, the Poles have hinted
that the level of assistance will diminish after 1983. Moreover,
in 1986, Warsaw is scheduled to begin repaying some of its debt
to Moscow--which then may be close to the equivalent of $10
billion. After his return from Moscow in early November, Deputy
Premier Obodowski said that Poland could meet this debt
obligation by developing several branches of production--such as
shipbuilding and building materials--to meet Soviet needs.
6 These so-called Polonia enterprises are mainly small
manufacturing firms entirely owned by foreigners, usually of
Polish descent. In 1982, there were 252 of these firms operating
under the authorization of 1976 and 1982 laws. They produced 0.3
percent of total industrial output, employed 0.5 percent of the
labor force, and earned $10 million in exports.
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According to Obodowski, however, each sector chosen would have to
export an equivalent of at least $1.4 billion annually to repay
Poland's debt. Such close integration of the Polish economy with
its Eastern neighbor would weaken significantly Polish capability
to export to the West. Moves toward integration presumably will
be limited by the degree of Poland's dependence on Western
inputs--parts, intermediate products, and some raw materials--
that cannot be provided by Poland's CEMA allies. Polish studies
estimate that if Poland ended all imports from the West, national
income in 1990 would be less than half that in 1980.
Many Constraints to Growth
Warsaw's efforts to deal with its massive debt obligations
will be the major constraint on economic performance. The regime
will continue to have limited amounts of hard currency for the
rest of the 1980s and must make tough choices between either
servicing its debt or importing the inputs necessary for economic
growth. Warsaw recently has affirmed its intentions to meet its
commitments under existing rescheduling agreements. Interest due
under these agreements is estimated at $600 million annually, and
Warsaw is supposed to pay back the rescheduled amounts--nearly $7
billion--between 1985 and 1989. Because Warsaw is unlikely to
get substantial new credits, it would have to continue to run
trade surpluses and hold down imports, which would lead to
restricted growth in the 1980s.
The Poles, realizing their difficult hard currency
situation, proposed to the banks a moratorium on the payment of
all other principal and interest due in 1983-1990. The banks are
sharply opposed to the Poles' proposal and hope to obtain terms
requiring longer payments. Assuming that the Poles eventually
compromise, the burden of payments to creditors will be even
greater than that resulting from obligations under existing
rescheduling agreements.
We believe there is little chance for Poland to increase
greatly its hard currency earnings through exports. Most of
Poland's manufactured goods already sell for 20-50 percent less
than similar Western goods, and the Poles are not doing much to
improve product marketability in Western markets. In addition,
output of raw materials--which provided almost 30 percent of hard
currency earnings in 1981--will increase slowly as a result of
the lack of investment in the raw material sector during the last
five years. Moreover, exports of manufactured goods are
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dependent in some measure on levels of Western imports.7 Warsaw
could increase exports to the USSR more easily--even though the
Soviets are increasingly reluctant to buy second-rate goods--but
could not get necessary imports in return. As a result, we do
not expect increases in economic growth because of favorable
export performance.
The Poles' current emphasis on increasing consumption at the
expense of investment will hold down their economic recovery in
the long term. The resulting levels of investment will not allow
the Poles to make the major structural changes--giving more
emphasis to agriculture and services and less to heavy industry--
that they had planned. Many industrial machines will become
obsolescent. The Polish press claims, for instance, that 65
percent of the machine tools currently in use will be
technologically obsolete (defined as 10-15 years old) in 1990,
and the remaining equipment will be obsolete by 1995.
Additionally, the Poles have not allocated sufficient funds, in
our view, for devising or implementing a conservation program to
reduce the use of materials per unit of output. Such a program
is essential to the success of the 1983-85 plan: one half of the
projected 40 percent growth in industrial production through 1990
is to come from increased efficiency. Moreover, Polish press
articles pointed out in January 1983, that the reforms--instead
of encouraging efficiency--have actually led to a more wasteful
use of fuels and energy by allowing firms to pass on excessive
costs to consumers.
Infrastructure problems will be an impediment to any rebound
because continuing investment cutbacks will further weaken these
long neglected sectors. For example, a railroad official
admitted in December 1982 that, although the rail system was
operating at full capacity, it hauled 20 percent less cargo than
in 1980. The same official added that one fourth of the
country's railroad track and one sixth of its rolling stock need
repairs for which there is a serious shortage of parts. Because
of these deficiencies, some plants have been forced to sell their
7 We do not have enough data to determine the exact correlation
between exports and imports, but Polish economists believe there
is a close relationship between levels of imports and industrial
production and, in turn, exports. In 1981, when imports of
industrial goods declined by 16 percent below 1980, production
fell by 17 percent and industrial exports by 16 percent.
Industrial performance in 1980 does not show such close
relationships. In 1980, industrial imports increased 5 percent,
production decreased 3 percent, but industrial exports increased
7 percent.
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products at the factory gate or to curb output, according to
Polish press reports. State truck transportation also suffers
from shortages of repair parts and poorly maintained roads.
Hydroelectric stations lack machinery to ensure the generation of
electricity during droughts.
Energy is another serious bottleneck. The Chairman of the
Sejm Coal Commission has said that hard coal production will not
increase above the 1982 level through 1990 because of investment
constraints and that maintaining output at last year's level
would require the opening of an average of 1.5 new mines
annually. Natural gas production--which supplied 5 percent of
total energy consumption in 1981 and is particularly vital for
the chemical and fertilizer industries--is dwindling due to the
depletion of gas deposits. According to Polish statistics,
output has already fallen from 8 billion cubic meters in 1978 to
an estimated 5 billion cubic meters this year, and Polish
economists have warned that production could drop to 3 billion
cubic meters by the mid-1980s unless new fields are discovered
and developed. Likewise, domestic oil sources--which supplied
only 2 percent of total oil consumption in 1981--will be depleted
in the 1980s.
We believe the regime will find it difficult to effect
further increases in worker productivity because of deep-seated
worker distrust and apathy. The regime has been able to
stabilize and even increase output by harshly penalizing
troublemakers and poor performers and by making limited use of
rewards. The effect of such measures probably has about run its
course. Workers' inducements will be limited at best under the
conditions of austerity which are expected to last at least until
the end of the decade. They also will lack an organized outlet
for their grievances as provided by Solidarity in 1980-81.
Considering all the above factors, we believe that if
external and internal economic conditions do not deteriorate
drastically from 1982 levels, Poland may be able to achieve small
increases in national income and industrial output in the next
three years. But economic performance seems likely to remain
below the 1978 level at least until 1986. Moreover, Poland will
remain vulnerable to economic shocks. The regime will
continually be trying to meet the conflicting goals of
stimulating economic recovery, paying creditors, and improving
living standards. The result probably will be only a little
uneven progress in each area, and a year of poor agricultural
weather, failure to secure large scale debt relief and credits,
or a revival of worker unrest could lead again to large declines
in growth rates.
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Table 1
Poland: Average Annual Rates y Growth
GNP
by Sector of Origin
prices)
(percentage change. constant
1979
1980
1981
GNP
-1.7
,-3.2
-6.6
Industry
-0.9
-1.3
-14.8
Agriculture, Forestry
-5.6
-12.5
2.6
Construction
-4.1
-2.7
-13.1
Transport, Communication
-0.4
2.0
-13.7
Trade
-0.1
-4.4
-8.4
Housing
2.6
3.1
1.8
Government, Other Services
2.5
2.0
2.8
1 L.W. International Financial Research Inc., Research Project
on National Income in East Central Europe Occasional Papers, No.
70-74. New York, New York, 1982
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Table 2
Main Indices of the Polish Economy
1981
1982
1978
1979
1980
Industrial Production
Industrial Production
(previous year = 100)
101.6
99.1
98.7
85.2
98.0
Coal (mln tons)
192.6
201.1
193.1
163.0
189.3
Copper (th tons)
332
336
357
327
348
Raw Steel (mln tons)
19.25
19.22
19.49
15.72
14.47
Rolled Products
(mln tons)
13.57
13.57
13.55
11.06
10.48
Passenger Cars
(number th)
325.7
349.8
351.1
239.9
229.1
Cotton Textiles
(mln meters)
919.2
886.0
884.2
788.3
693.1
Wool Textiles
(th meters)
124.1
122.9
121.0
106.1
91.3
Agricultural Production
Grain (mln tons)
21.5
17.3
18.3
19.7
21.2
Potatoes
46.6
49.6
26.4
42.6
'32.0
Sugar Beets
15.7
14.2
10.1
15.9
15.1
Cattle (mln)
(June census)
13.1
13.0
12.6
11.8
11.9
Hogs (mln)
(June census)
21.7
21.2
21.3
18.5
19.5
Investment
(previous year = 100)
102.1
92.1
87.7
76.2
81.5
Real Wages
(previous year = 100)
97.3
102.0
104.0
101.0
77.42
Consumer Prices
(prevous year = 100)
108.7
106.7
109.1
124.4
200.0
Trade With the West3
Exports (mln $)
5,481
6,350
7,506
5,448
5,639
Imports (mln $)
7,368
8,038
8,488
5,422
4,174
Debt (mln $)
(Gross)
17,844
22,669
24,840
25,500
24,300
1 Polish Statistical Office, Polish Statistical Yearbook, 1982.
2 Estimate.
3 Customs data.
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Sanitized Copy Approved for Release 2010/05/11: CIA-RDP85T00287R000501070001-0
Table 3
Foods
Poland: Supply of Selected Goods to the Market1
Jan-Sept
1979 1980 1981 1982
Jan-Sept 1982
Jan-Sept 1981 = 100
Meat (th. tons)
2005.4
2034.1
1674.7
1103.9
86.2
of which poultry
309.5
331.3
345.9
92.1
36.3
Fish (th. tons)
252.4
271.3
239.8
158.3
86.5
Milk (mln. liters)
2311.7
2389.1
2666.7
2269.0
122.1
Eggs (mln. tons)
2079.8
2275.7
2548.7
1778.3
91.6
Butter (th. tons)
249.7
259.6
247.7
162.2
93.2
Animal Fat (th. tons)
265.0
162.4
144.3
92.3
84.4
Potatoes (th. tons)
1685.5
1335.9
1089.9
682.1
143.82
Sugar (th. tons)
1111.5
1059.4
888.4
721.2
130.4
Bread and Pastry
(th. tons)
2706.8
2799.3
3017.0
2255.1
98.3
Coffee (tons)
31751
28721
27511
13229.0
82.7
Spirits (mln. liters)
175.4
184.2
140.0
97.2
88.3
Consumer Goods
Textiles:
Wool (mln meters)
59.0
54.9
44.2
19.9
56.2
Shoes (mln pairs)
65.7
66.9
61.1
39.9
86.0
Radios (th. units)
2192.6
2135.0
2121.2
1098.3
67.4
Passenger Cars
(th. units)
217.9
164.6
143.3
95.6
85.4
Refrigerators
(th. units)
942.9
708.4
647.6
412.6
86.7
1 Polish Statistical Office. Biuletyn Statystyczny, Warsaw, No. 8, 1982.
2 This figure reflects the average potatoe crop that was harvested during the fall of
1981 and marketed in late 1981 and 1982. The 1982 crop was about 25 percent below
average, and affected supplies in late 1982 and 1983.
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25X1
Sanitized Copy Approved for Release 2010/05/11: CIA-RDP85T00287R000501070001-0
Table 4
Poland: Balance of Payments
(mln US $)
Current Account
Trade Account
Exports
Imports
Net Interest
Other
Capital Account
Medium and Long Term Debt
Repayments
Drawings
Short Term Debt
Repayment, Net
Arrears from previous year
Gap
1981
-2,247
-433
4,971
5,404
-2,293
479
2,352,
-7,282'
19821
-1,093
350
4,980
4,630
-1,830
387
-6,959'
-839 -92
0 -573
573 4,400-6,400
1 Preliminary.
2 Including rescheduled and unpaid amounts.
3 Includes $196 million in short-term credits recycled from interest
payment.
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Sanitized Copy Approved for Release 2010/05/11: CIA-RDP85T00287R000501070001-0
POLAND: MONTHLY INDUSTRIAL PRODUCTION INDEX
(SEASONALLY ADJUSTED, NOVEMBER 1976=100)
70 1- -- r---- r-
1973
1981
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
?
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Sanitized Copy Approved for Release 2010/05/11: CIA-RDP85T00287R000501070001-0
F/6- uR6
POLAND: COMPOSITION OF NON-COMMUNIST IMPORTS
?:;::,
200
....!?:...4.?????
,..? ?????? ....
,.? ? ? %v.
4-:??????
??.?? i::::::::::ii:::::ii
:
150 liK1 !iii :11: ligiiiii i
?i:itigitt: OTHER.:
.x:::1:-. :?:-:
:, ?:::.:::::::::::::::.:: : ; ::::::::.:::.% ' ;
.... .. ...:.........-.:,?,..:-. : :::?:...
..:......:...-... - ? ?
,
10500
-. Kit.::. :i:?ii
:ii?l?iki
;::i-i.i.i-i l?i l?l?:?E?.i.i.i:i..?li.?i.:?
)..? 4..:. )?.:. .::*.X ,:)... ::.:....:.?.: :,)%:.: :*:.? ..;.:-. :\?..%? :...:, :;).:-.+:.*
.:.
..1'. ...F...?:
):4 O.1 ..,7...1 0..O..?.: ?:.*- .).. D).*? .:. ..:?
.:.* ..?.: '.... *:
*.. .: .%.
%').*.?.?:,. ? :?.??:.?: ..-%iia 4?..::?:1I.):...+.:?...:..*.:)?:i.:.).1...4-.......))4...M..)::...??*..t.
4.:.?
:??:??. +
. .4 .)..N..,..:....l...;... 4::i .:..o ,E.. .?:'.;..*E..K. 0.xl.)..?*..:.).i.ik.?:.:;j)ii?::.
? ....2.::::.::::::?::::,:lx:::.::::?::::.:?;,? .
1:::**:::::::::K:ii**::::?:*:::?::::i:ki:::1:?:?i.*::::::1::%. 4:iiiiiiiiiiiiiiiP:.
, : .. .? , : .... :i.: .: : .: : i .: :. : .: : : ..? : .: .: .: i .: .: : .: : ??: .:4: $1, .: g.: i . :: . .: 1 : .: : :. .: :4: : .. . : .! . ? - ? ? t?? : : .: .: ? :: :, .. .i.: .: ..: .: .?. ..: :.:.:.: ...:::: . .. ....: ..:. ...: .? ...? ...i.... ::::: ....:.)::::: ...:: ...l.k... .:. ;::,? .: : .* : .:: : . . " '
42).:?:xlm.,:vg?????? ?
;..1.-ttl:.?:::.:?:.:?)::.:1:.?..::".::?.::/:1..::?.::?.tEkt;::.:*
, ..?...................00.0.-.0. ???.--
.?:,....,.....,.........? .0.? .???? ......-
? .??????????-ww............... V,?:::..:?...)..:::::..:::::..*::?*
v..I....- MANUFACTURES 440......
C
1980
1981
1982
1983
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Sanitized Copy Approved for Release 2010/05/11: CIA-RDP85T00287R000501070001-0
POLAND: TRADE WITH NON-COMMUNIST COUNTRIES*
(SEASONALLY ADJUSTED, MONTHLY DATA)
1 1000 million us $
A
'I
21%
, I 0
% I I
%
? #
400
200-
0
A
? .
,''''-"??" 2
%?1
? 0
ex
orts
imFiorts
".?
? ?
? , ... .balance
, ..
. ,
-200
1980
?
? ? , ?
*.. ? ? ? ?
1981
1982
1983
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Sanitized Copy Approved for Release 2010/05/11: CIA-RDP85T00287R000501070001-0
POLAND: TRADE WITH COMMUNIST COUNTRIES*
(SEASONALLY ADJUSTED, MONTHLY DATA)
-1 1200 erallion us $
foo- 'I
?.
I o
I
? - ? ,
?
/ ?
800
600-
400-1
A
/
t ?
t
Soo.'
?
in; orts
?
xporis
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Sanitized Copy Approved for Release 2010/05/11: CIA-RDP85T00287R000501070001-0
SUBJECT: The Polish Economy: Performance Under Martial Law
and Prospects
Distribution:
1 - William Milam
1 - Stephen Canner
1 - DDI
1 - ADDI
1 - DDI Registry
1 - ExDir
1 - NIO
1 - OD/EURA
2 - EURA/PS
4 - IMC/CB
1 - C/EURA/EE
1 - C/EURA/EE/NE (Chrono)
1 - C/EURA/EE/Regional E/W Economics
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