Fin Min and NBP lock horns over $7 billion reserve

The Ministry of Finance confirmed yesterday it was working on a way to release billions of zlotys in paper provisions held by the National Bank of Poland (NBP) and to use the funds to boost its strained budget. But the NBP denied it was discussing such plans, which would effectively force it to print money under the booked provisions, signalling that a battle over the $7 billion in revaluation reserves has yet to be fought. Sources informed Reuters last week the ministry was pressuring the NBP to change self-imposed accounting rules and release at least part of the provisions that it holds against exchange rate risks on its foreign reserves. Such a cash injection would ease the pain of reforms to the rigid national budget needed to absorb billions of euros in development funds after EU entry. One central banker said last week that such a move could lead to higher rates. (Reuters; Rzeczpospolita, p. B7) M.M.