Banking on Poland
Michał Pakulniewicz: It says on your website that the World Bank (WB) assists Poland in its economic transformation through lending, advice and technical assistance. What is there for the WB to do here?
Edgar Saravia: It's true that, relatively speaking Poland is more developed than most of our clients. But it's also pretty clear that there is still an unfinished reform agenda. We think that there are some areas where we can still be of assistance and add some value. Additionally, as a global development institution, it is important for us to transfer experiences from one part of the world to another. There are a lot of lessons that have already been learned from our experience in Poland.
The approach to our work in Poland, of course, is different than the approach we take to less developed countries - in each of those countries we have a document which maps out the WB's activities in that country for a period of three to four years. What we have in Poland is a so-called partnership strategy, which is a flexible framework that identifies priority areas rather than specific activities. Within this framework, we contribute technical expertise and know-how and limited financing in response to demand from the government. These specific activities are discussed with the government on an annual basis.
So what activities does the WB specifically concentrate on in Poland?
Over the last few years we have been involved primarily on the lending side in three areas. The first one is the road sector, where the focus has been exclusively on maintenance.
The second area, which goes back to the late 1990s, has been supporting the various government programs related to restructuring the coal-mining sector. We concentrated on the mitigation of some of the social effects of downsizing the industry and on making sure that the closure of mines takes place in a safe and environmentally friendly manner. We are coming to the end of our involvement in the sector in June.
The third area in which we are involved is regional/rural development. We have been working with the 500 poorest rural municipalities in Poland initially to help co-finance some smaller infrastructure projects under an earlier project, and now we are moving to helping them develop and implement social-inclusion strategies.
Doesn't your strategy towards small municipalities overlap with the EU's structural funds programs?
We certainly don't want to do that, because that wouldn't make any sense. In the case of rural infrastructure, we were co-financing, so we weren't overlapping with anyone. More importantly, we were also trying to build the capacity of these rural municipalities to prepare quality projects and to implement those projects. Our evaluation shows that those municipalities where we were actively present had more projects ready for much larger financing. The same philosophy applies to the current programs regarding social inclusion.
What other projects are you currently involved with?
The one we have most recently approved for Poland is the partial financing of a project aimed at preventing flooding in the Oder River basin. There are much larger donors and sources of financing, but we are also one of the financing entities. It is a very large project costing about E500 [zł.1,915] million, of which we are providing around E140 [zł.536] million.
Does this mean that you are concentrating on financing the projects in Poland?
If all that is required in a certain area is financing, then we are not the government's first choice, because we are not the cheapest source of funds. But, if in addition to financing, there is also a need for technical expertise and advice either in the preparation and/or implementation of a project, then we can demonstrate that whatever additional amounts the government pays for our financing will be more than offset by the value of our expertise - that is our added value and our competitive advantage.
How do you see Poland's economic prospects for the next few years?
Everything at the present time looks quite favorable and the economy is showing signs of robust growth. The macroeconomic indicators are all very positive. In our view, this presents a good opportunity to pursue certain reforms more aggressively, primarily in the area of greater consolidation of public finances. I hope that Poland ... pursues these reforms now, rather than having to undertake them when there is no other option and conditions may be much less favorable.
