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Political Update


1. A Rise in Interest Rates. The Monetary Policy Council has raised interest rates by 1.5 percentage points, after the government failed to comply with the Council’s recommendations. These mainly concerned the tariff policy whose aim was to restrain inflation. The Council, which is responsible for inflationary policy, decided that the rise was necessary. They wanted to keep the long-term target to get inflation below 4% by 2003 within reach. This year’s target of around 6% has already been called unrealistic by the government and the Council. Rates have increased to the following levels: lombard to 23% and rediscount to 1.5%.

2. Property Hand-Back The Polish parliament, the Sejm, has passed the Universal Restitution of land and Property Act. Under the terms of the act part of still-unprivatised state property will be distributed among Polish citizens. The property is mainly communal and cooperative-owned housing to be given to its current occupiers. The Act will also allocate approximately 20 ha of land to each farmer. Those who have already bought their communal flats or participated in privatisation will receive only a “restitution voucher”. The value of the voucher has yet to be set but will probably be below PLN 1000.

The economic feasibility and social fairness of this new law has been debated hotly. One reason is that the value of the property given to citizens will differ greatly in some cases. The president has vetoed the Act as unconstitutional pointing also to unpredictable budget consequences.

3. Presidential Elections.Thepresidential elections are to be held on 8 October this year There are 13 candidates, and the incumbent, Aleksander KwaĹniewski, who is currently leading in a variety of public opinion polls with 60–67% support, is expected to be re-elected.

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