Poland Wins Relaxation on Some of Its Debt : Europe: Action by Western nations will enable Warsaw to stretch out its payments on $9.4 billion.

Poland won another major economic concession from the West on Friday as 17 industrialized countries, including the United States, agreed to relax the terms on almost one-quarter of the country’s foreign debt.

The extraordinary gesture, approved by the Paris Club, an informal group composed of representatives of the 17 governments, will enable Warsaw to stretch out payments on $9.4 billion of the $27 billion that the country owes to Western governments.

In all, Poland owes about $40 billion in foreign debt. The remaining $13 billion is due commercial banks, which loaned heavily to Warsaw during the late 1970s.

The rescheduling is the largest that the major industrialized countries have ever approved for a debtor country. Jean-Claude Trichet, director of the French Treasury and head of the international panel, called the action “the most extraordinary we’ve ever had.”

At a news conference in Paris, Trichet called on commercial banks to follow the example set by the governments and grant Poland comparable terms on the $13 billion that Warsaw owes to them. Several European banks have threatened to stop trade credits for Poland unless the government begins paying interest soon.

The action by the Western governments marks a major victory for the new Solidarity-run government in Warsaw, which had been seeking just such concessions, both as a sign of support and to help ease the drain on the country’s meager resources. The debt service on Poland’s borrowings from foreign governments amounts to $1.5 billion a year.

Polish Prime Minister Tadeusz Mazowiecki had written personally to each of the 17 creditor governments asking them to set up a special committee to review Poland’s debt problem. He had sought outright cancellation of all of Poland’s debts to Western governments. Nevertheless, Friday’s action marked a major coup for Warsaw.

For all the fanfare about Friday’s rescheduling, U.S. and foreign officials cautioned that the Western governments’ decision is not intended to set a precedent for other emerging East European democracies.

Hungary also is seeking a rescheduling of its debt to foreign governments, but the Western countries are holding firm until Budapest takes bolder steps to put its economic house in order. And other countries, such as Bulgaria, are not regarded as anywhere near ready for such concessions.

Poland has undertaken a sweeping program to overhaul its economy and to move toward a free-market economic system. In all, Western nations are contributing about $4 billion to Warsaw in aid and currency-stabilization funds.

U.S. officials said Friday that the West has begun to differentiate among the East European economies, concentrating available aid and lending on those, such as Poland, that have begun economic reform programs and are moving toward some form of democracy.

East Germany is expected to be treated as a special case, with much of its debt picked up by the current West German government if the two countries reunify as is widely expected after the March 18 East German elections.

Others, such as Bulgaria and Romania, are considered not far enough along yet to merit new concessions from the West.