Poland Considers Plan to Swap Its Debt for Stock

The government might be willing to trade foreign debt obligations for shares in state-owned companies to ease problems in paying interest on the $36 billion it owes abroad, the Finance Ministry said Monday.

Deputy Finance Minister Andrzej Dorosz said the communist government would consider approving so-called “capital swaps,” under which Western creditors would receive shares in Polish companies in exchange for writing off Polish debt obligations.

“Poland is not rejecting this kind of operation,” Dorosz told a news conference. “If there is substantial interest (by our Western creditors) such operations could be carried out.

“We at the finance ministry cannot see any formal or substantial objections against this kind of operation.”

Dorosz said shares could be issued to creditors under a law on joint ventures that took effect earlier this year. The government is now proposing amendments to the law that will allow foreign partners to hold a majority share in joint ventures.

Dorosz said Poland’s hard-currency debt was growing faster than expected and would total $36.25 billion by the end of 1987, compared to $33.5 billion at the end of last year.

More than half of this increase could be attributed to the dollar’s depreciation and the consequent increase in the value of Poland’s non-dollar denominated debt, Dorosz said.

The remainder of the increase was due to Poland’s inability to meet its interest payment obligations, he said.

Dorosz estimated Poland would have a surplus of $900 million in its trade with Western countries this year, compared to a $1 billion surplus in 1986.