January 13, 2017 / 9:29 PM / in 9 months

UPDATE 1-IMF board approves 8.24 billion-euro credit line for Poland

(Adds comment from IMF official, credit line details)

By David Lawder

WASHINGTON, Jan 13 (Reuters) - The International Monetary Fund said on Friday its executive board approved a new two-year flexible credit line arrangement for Poland worth about 8.24 billion euros, about half the size of the country’s previous credit line.

The IMF said the arrangement is expected to be treated by Polish authorities as precautionary, with no plans draw upon it.

“Poland continues to benefit from very strong economic fundamentals and policy frameworks,” IMF Deputy Managing Director Mitsuhiro Furasawa said in a statement. “Economic growth remains robust, unemployment continues to decline, and deflation has dissipated.”

Despite the Polish economy’s strengths, the Furusawa said that external risks remain elevated, including potential spillovers from slower euro-area growth, stress in the European banking sector and looming negotiations for Britain’s exit from the European Union.

“A faster-than-expected pace of monetary policy normalization in the United States and bouts of financial market volatility could affect Poland’s economy, given its sizable external financing needs,” Furusawa added.

The flexible credit line is intended as insurance against such external shocks, the IMF said, supplementing Poland’s flexible exchange rate and strong reserve buffers.

The IMF first established Poland’s flexible credit line in 2009 during the financial crisis. The latest arrangement is equal to about 159 percent of Poland’s quota, or share in the IMF. (Reporting by David Lawder; Editing by Chizu Nomiyama and Marguerita Choy)

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