Drastic Decline in Trade Surplus With West : Poland’s Economy Slides Further

Poland’s tattered economy slid further toward stagnation in 1985, led by a drastic decline in its trade surplus with the West, according to government figures published Tuesday.

The government’s central statistical office said Poland’s trade surplus with Western countries, from which it pays interest on its foreign debt, reached only $1.08 billion in 1985.

This was less than half the sum that Poland needed to keep abreast of the interest on its $29-billion debt and 28% below the trade surplus of $1.5 billion reported for 1984.

It marked Poland’s worst trade performance since 1982, when the country was under martial law.

In recent weeks, some Polish economists have warned that unless Western creditors come forward with new loans in the near future to help boost the country’s exports, Poland will either fail to meet its debt obligations or will be forced to make radical cuts in its already restricted imports of Western consumer and industrial goods.

Poland failed to make a $550-million payment due Dec. 31 under a rescheduling agreement reached last June with the so-called Paris Club of 17 Western creditor governments, including the United States. The payment was deferred for three months to allow for negotiations on a new payment schedule.

U.S. Ban on Credits

A U.S. ban on new government-guaranteed credits--one of the sanctions that the Reagan Administration imposed after the 1981 suppression of Solidarity, the independent trade union movement--is still in force, although Solidarity leader Lech Walesa and Cardinal Jozef Glemp, Poland’s Roman Catholic primate, have both urged that remaining economic sanctions be lifted.

The 1985 economic figures, published in all major newspapers Tuesday, were described as preliminary but are not expected to change significantly.

Diplomatic observers characterized Poland’s economic performance as dismal and said 1986 offers bleak prospects for breaking out of the country’s prolonged economic crisis.

“ ‘Appalling’ and ‘failing’ would be appropriate terms to describe this economy,” a Western European analyst said.

However, Polish authorities insisted that the figures give some cause for optimism, but they did not make clear the basis for this claim.

The Communist Party newspaper Trybuna Ludu, for example, spoke of “mostly favorable results obtained by the Polish economy last year,” but it warned that shortcomings could not be ignored.

The newspaper stressed that the value of exports exceeded imports by more than $1 billion. But it failed to note that this represents a drop of $421 million from 1984 in the hard-currency surplus that Poland needs, not only to service its swelling debt but to buy imported goods and raw materials for domestic and export industries.

“A sharp increase in exports, urged on by import needs and the necessity of servicing the foreign debt, must become the key task for industry, starting with the first days of this year,” the newspaper said.

Singling out what might have appeared to be bright spots in the economy, the government report said industrial output rose by 3.8% last year. But this represented a slowdown from 5.3% in 1984.

National income--an index similar to the gross national product that Western countries use to measure overall economic performance--was said to have risen slightly in 1985, but the report disclosed no figure. Unofficial estimates put the rise at 2% to 3%, or about half the previous year’s growth. At the beginning of 1985, Poland’s national income was still about 14% below the level reached in the peak year of 1978, the year the country’s debt-burdened economy began a downward spiral that led first to a nationwide workers’ revolt in 1980, then to the rise of Solidarity and the martial-law crackdown of 1981.

More ominous than the slowing of last year’s overall growth was the reversal of a trend toward modest expansion that Poland managed to register in its exports to the West from 1982 to 1984. In 1985, imports from Western countries rose by 5.9% while exports to the West fell by 5.4%.

Moreover, as the government continued to lag behind in interest payments, its debt to the West grew in 1985 from $28.6 billion to $29.2 billion. Polish officials have projected a further increase to $30.5 billion this year, representing just over half of Eastern Europe’s total indebtedness to the West.

In contrast with trade to the West, Poland’s exports to other Communist countries rose 5.9%, while imports were up 4.5% over 1984. Poland nevertheless registered a deficit of 710 million transferable rubles, an arbitrary accounting unit used by Soviet Bloc countries.

Winter Blamed

Officials have frequently blamed the economy’s evident stagnation last year on the unusually severe winter of 1984-85. Independent economists, however, reject this explanation and point instead to the deteriorating quality of Poland’s manufactured goods and its deadlocked program of economic reforms that were to have given state-run factories new incentives to seek export markets.

“Blaming the previous winter for the situation, an explanation which can be heard from time to time, certainly does not merit serious consideration,” one analyst, Ryszard Bugaj, wrote this month in the independent Catholic newspaper, Tygodnik Powszechney.

Poor weather, however, did hamper Poland’s farms, most of them privately run and still dependent on horse-drawn machinery. Grain sales to the state fell by 5%, milk by 3.3% and poultry by 12%. Only cattle procurement rose--by 10%.

Industry’s problems are largely man-made. They include aging equipment, shortages of imported parts and raw materials, a deteriorating transportation network and a sullen and apathetic work force whose wages nevertheless rose by 18%. Government spokesman Jerzy Urban acknowledged in a news conference Tuesday that this signified a failure by the government to tie wages to improvements in productivity and quality.

The government said output fell below plan targets in the mineral, chemical, fuel, metallurgical and light (consumer) industries. The amount of freight carried by Polish transport fell 3.1%. The state-run shipping fleet, beset with rising fuel costs and repair problems and shrinking Polish exports, carried nearly 10% less cargo last year than in 1984.

Western analysts said some of the government’s figures, negative as they are, appeared to be inflated.

In the important category of housing, for example, the government said its plan target had been “overfulfilled,” with 137,500 new apartments completed in 1985. But this represented a drop of 3.8% from the year before, despite a shortage of 2 million apartments and waiting lists in most cities more than a decade long.

Moreover, one-quarter of the new apartments were said to have been completed in December--indicating that many of them may have been turned over to families in less than livable condition in a year-end rush to exceed the plan.