State eliminates debts

Alan Heath
25-07-2002, 00:00

Once upon a time in a far off land the government said that it would not collect the money that indebted companies owed to it. And those that owed the government many, many millions did not have to pay. And they all lived happily ever after.

Sometimes fairy stories come true. They may be about to come true for the state owned sector in this country.

The ideas of new treasury minister Grzegorz Kolodko about restructuring the debt of state owned firms hits the bulls eye, in the opinion of those bosses in charge of nationalised companies and those institutions who have to bring some health to the financially sick. In the months leading up to EU entry this would free the monopoly money that is circulating in the economy as well as giving new life to those that need it.

Bosses of state concerns argue that it is cheaper for the state to bail out their companies rather than find itself having to pay out into the bottomless pit of social security and dole as well as all the social problems that this leads to. So all the state has to do is to forget about what the nationalised firms owe it in unpaid tax and other unpaid debts. In other words, stop living on the never never.

The best news for the state sector is not the elimination of their debt but the ability for banks to write off bad debts against taxation, provided of course that the money was originally loaned for restructuring the indebted state firms. This will bail out the Szczecin shipyard, to which the banks will not even consider loaning cash. At least that is the theory of economy minister Jacek Piechota.

Some of the bosses of the state monoliths readily admit that the governmentís proposals are unfair but say that there is no other way to pull them out of the water.

Arkadiusz Krezel, head of the industrial development agency ARP says that the monopoly money needs to be taken out of the economy before Poland joins the EU. Brussels will not accept what amounts to subsidies and Poland will be forced to comply. Without eliminating the debt before accession would be the same as bankruptcy which could have worse effects for the national piggy bank and only increase the queues outside the unemployment benefit offices.

© ℗
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Gospodarka / State eliminates debts