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Poland Initial Results
Within one month, stores were well stocked, and the
long
lines in front of them had disappeared. Individual budgets
rather
than the availability of goods became the primary
determinant of
buying patterns. A large number of street vendors
appeared,
contributing to the supply of consumer goods and competing
with
established stores. This new type of enterprise often was
the
starting point for launching more established business
units.
Besides income policy, the new government used highly
restrictive monetary and fiscal policies to reduce
aggregate
demand. The reorganized central bank drastically limited
the
quantity of money by imposing a positive real rate of
interest,
introducing and subsequently increasing obligatory reserve
ratios
for the commercial banks, and imposing caps on credits
(see Banking and Finance
, this ch.). The budgetary deficit in
1989 had
been equal to 11 percent of expenditures. In 1990 this
deficit
was converted into a surplus of 1.3 percent of
expenditures. The
surplus then began to decline, however, in the second half
of the
year, and by the spring of 1991 negative economic factors
had
again created a large deficit. The government eliminated
most
enterprise subsidies from its budget and introduced
specific tax
reductions to force state enterprises to depend on their
revenues. In the many cases where the government action
threatened their operations, state enterprises gained time
by
developing a system of interenterprise credits, selling
some
extra equipment and materials, and obtaining extensions
for the
payment of taxes and debts.
Data as of October 1992
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