NBP to use Forex as a tool to encourage gov't to get tough on fiscal reform?

The National Bank of Poland (NBP) may buy back some of the foreign debt with its currency reserves to help close a gaping hole in the 2004 budget if the Cabinet pushes through tough fiscal reforms, Monetary Policy Council (RPP) member Dariusz Rosati said on Thursday. He told Reuters in an interview, the preliminary idea was a variation of a 2001 deal, when the NBP used $2.1 billion of the forex reserves to buy back early debt owed to Brazil at a hefty discount. "If we use some foreign reserves to make an early repayment, we would lower the foreign share of our public debt, and that would give Kołodko a little room for maneuver and borrow on the domestic market," Rosati said. (Reuters) M.M.