POLISH SELL-OFFS TO FUND PENSIONS

by Christopher Bobinski in Warsaw

The proceeds from the sale of some of Poland's largest corporations and financial institutions are to be used to fund pension reforms, according to a government document given to members of parliament.

Under the scheme, 52 companies including giants like Polska Nafta, which owns Poland's refineries, Polish Oil and Gas (PGNiG), the integrated natural gas company, and Orbis, the hotel chain, are to be privatised to plug the budgetary gap.

The plan envisages the establishment of compulsory private pension funds to provide future retirement benefits through investing a fifth of the present social security payment. This amount is currently paid by employers and is spent directly on payments to existing pensioners.

The budgetary gap, estimated at around 1 per cent of GDP, will begin to appear in 1999 when the reform comes into force.

The privatisation list also includes PKO BP, the country’s largest retail savings bank, Telekomunikacja Polska, the national telecoms operator, pharmaceuticals producers and a group of power generators including the Kozienice and Polaniec plants.

The planned direct link between pensions reform and privatisation proceeds commits the government and its successors to a long-term programme of disposals whose abandonment would jeopardise budgetary stability.

The test also contains institutions whose privatisation is under way such as KGHM Polska Miedz, the copper producer, Ciech, the chemicals trader, and PZU, the state-owned insurance company and the sale of the Pekao SA banking group, and LOT, the national airline, which are at the planning stage.

SOURCE: THE FINANCIAL TIMES, 20 June, 1997, p. 3.

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