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Poland The Role of Currency Exchange
In this situation, expanded exports to the West
provided the
only alternative for the many enterprises whose survival
depended
on foreign trade. The government's stabilization policy
had an
impact that promised expansion of exports to hard-currency
markets. In 1991 drastic limitation of domestic demand,
devaluation of the zloty by 32 percent, and liberalization
of
access to foreign trade by private entrepreneurs resulted
in
significant expansion of export earnings in convertible
currencies. In 1990 the volume of hard-currency exports
increased
by 40.9 percent to over $US12 billion, while hard-currency
imports increased by 6.3 percent, securing a positive
trade
balance of $US2.6 billion.
The level of exports earning hard currency in 1990 was
particularly impressive in comparison with the generally
sluggish
growth of that category in the late 1980s. In the last
years of
the communist era, fuel exports declined steadily, and
metallurgical exports decreased in three of the last five
communist years. Construction work in countries paying in
hard
currency declined in the first three years of the period,
whereas
exports from the wood and paper, engineering, and chemical
industries behaved unevenly.
In 1990, by contrast, hard-currency exports increased
in most
sectors of the economy. The largest increases in that
category
were achieved in agricultural, metallurgical, and chemical
products. In general, the share of manufactured products
in
Poland's export mix declined sharply with the sudden shift
away
from Comecon trade. In 1990 the largest major categories
of
manufactured exports were, respectively, machines and
transport
equipment, miscellaneous manufactured goods, and
chemicals; their
share of total exports was 42.4 percent, compared with
67.3
percent for the same categories in 1985. Growth in exports
of
food, raw materials, and fuels accounted for the
difference.
Although the share of engineering products among
exports
declined, that group was the most important single earner
of hard
currency in 1990, followed by metallurgical, chemical, and
food
products. In 1992 all those industries possessed
considerable
capacity to expand their productivity, given appropriate
investment in modernization and efficient marketing.
However,
both modernization and marketing depended heavily on
cooperation
with Western firms. Despite the remarkable increase in
hardcurrency exports in 1990, their overall impact on the
national
economy was limited by the strong effect of reduced
transferableruble exports on the priority sectors. In 1990 Polish
light
industry led the general decline in ruble exports.
At the beginning of 1991, however, the growth rate of
hardcurrency exports declined, and imports increased very
rapidly.
Inflation remained high, and the advantage created by the
1990
devaluation slowly eroded. Another devaluation, this time
17
percent, was effected in May 1991. At the same time, the
zloty
was pegged to a combination of hard currencies instead of
to the
dollar alone. In October the fixed exchange rate was
replaced by
an adjustable rate that would be devalued automatically by
1.8
percent every month as a partial hedge against inflation.
The
final import figure for 1991 was 87.4 percent higher than
that
for 1990. In 1991 exports in convertible currencies were a
little
over US$14.6 billion and imports were nearly US$15.5
billion,
creating a hard-currency trade deficit of about US$900
million.
Figures for the first five months of 1992 showed a
reversal
of the previous year's imbalance. The hard-currency trade
surplus
of US$340 million reported for that period was attributed
to a
combination of commodity turnover and cancellation of
interest
payments in Poland's debt reduction agreement with the
Paris
Club.
For years under the old system, Poland dispersed small
amounts of its export and import trade to a large number
of nonComecon countries on all continents. Experts considered
such
dispersion a policy weakness because marginal suppliers
and
buyers usually trade at less favorable terms than
high-volume
partners, making the former expendable in hard times. This
factor
became even more important in the first postcommunist
years; in
1990 Poland's fifteen top import customers absorbed only
81.3
percent of exports, while the fifteen top suppliers
contributed
86.2 percent of Polish imports. Poland's traditional
partners in
the former Soviet Union and Germany (before and after
their
respective realignments) retained disproportionately high
shares
in both categories in 1990 (see
table 18, Appendix).
Data as of October 1992
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