PUBLIC FINANCE MANAGEMENT, EMPLOYMENT, AND PRIVATE SECTOR DEVELOPMENT PROGRAMMATIC POLICY LOAN

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Poland has made impressive progress towards creating a modern, market-based economy, and has successfully managed its integration into the European Union (EU) since accession in 2004. Recent macroeconomic performance has been favorable, with strong output growth and a rapid decline in unemployment combined with low inflation and external imbalances. Meanwhile, buoyant tax revenues have led to a decline in the fiscal deficit. Growth has been built on a vibrant private sector which now accounts for three-quarters of the economy. High growth in domestic consumption reflects the rapid increase in living standards for most Polish citizens. Likewise, poverty levels have decreased and are now concentrated in rural areas and among the long-term unemployed. But the reform momentum has slowed following EU accession, and the strong growth over the last few years reflects to a significant extent a rebound from the economic downturn in the earlier part of the decade combined with a favorable external environment. The programmatic policy lending program will support the government's plans to enhance the quality and efficiency of public finances, increase the supply of relevant and skilled labor, and strengthen the business environment. The programmatic series will be accompanied by a program of technical cooperation and knowledge sharing to complement and extend existing reform plans and priorities. The policy focus of each operation will be closely aligned with the government's current reform priorities and the political feasibility of specific reforms. The Bank's engagement with Poland on key policy issues provides important experience and knowledge to the Bank as well, which will be relevant for the collaboration with other countries in the region.