Germany to Forgive Half Of Poland's Official Debt

GERMANY announced yesterday it would forgive half of Poland's official debt of $5.54 billion in support of Warsaw's economic reforms.

The Finance Ministry said in a statement Poland would have to pay back the remaining 50 percent of the debt within 18 years at market rates under an agreement to be signed soon.

The ministry said its move was in line with a landmark agreement last March between Poland and the 16-nation Paris Club of government creditors to waive at least half of the country's $33 billion official debt.

It said the bilateral agreement, concluded by German and Polish negotiators at the Finance Ministry in Bonn, addressed the particular challenge faced by Poland.

Warsaw launched an ambitious reform program after the fall of communism in Eastern Europe.

Last week the Polish government announced a slow-down in the reform program designed to ease conditions for consumers. The more cautious approach sparked resignations among many reform-minded ministers.

"This partial forgiveness should improve conditions for the success of economic reform and allow punctual service of the remaining debt," the German statement said.