Polish government lowers public debt... on paper.

Polish Ministry of Finance spent Euro 4 bln of reserves to decrease the debt for EU Commission approval. Thanks to this intervention the level of the debt looked better on the paper than in reality.

Few days before New Year the debt was 53 percent of GDP. Although earlier, there were speculations whether the debt will not grow more than 55 percent of GDP (the second threshold for public debt, according to the EU regulations). Before that unexpected news was announced, Polish foreign currency reserves decreased from Euro 5.6 to 1.6 bln. According to the report, the Ministry used swaps to decrease the debt.

However true level of Polish government debt will be known only in 3Q of 2011.

In April 2009 Poland received access to the Flexible Credit Line: Poland can get 20.5 bln dol. loan in 12 months from International Monetary Fund. In December 2010 Warsaw received informal approval for an extension and increase to its running FCL, which bears now 29 bln.

It is worthy to remind, that former National Bank of Poland president Slawomir Skrzypek, who died in a tragic government plane crash in April 2010, believed FCL is not needed for Polish economy.