Debt-Reduction Accord Seen as Big Boost for Poland : Finance: The agreement cuts by almost half the $14 billion in Communist-era obligations the nation owes commercial lenders.

Bankers from around the world signed a generous debt-reduction agreement with Poland on Wednesday, cutting by almost half the $14 billion in Communist-era obligations still owed to more than 400 commercial lenders.

The long-awaited agreement brings to an end almost 15 years of haggling over Poland’s indebtedness and is expected to give an important boost to the country’s economy, already one of Europe’s fastest-growing.

“Poland will now be in a much better position to exploit its economic potential because of the improved investment climate,” said Bernd Klett, an Eastern European analyst with Deutsche Bank in Frankfurt, Germany. “The insecurity surrounding the foreign debt problem is now over.”

Poland has lagged behind other Eastern European countries, namely the Czech Republic and Hungary, in attracting foreign investment, in large part because of its poor repayment record. The Polish government at times has unilaterally stopped making payments on its debt service, which made it difficult for would-be investors to obtain new loans.

Under the agreement, which takes effect Oct. 27, Poland must adhere to a strict 30-year repayment schedule for its remaining debt, paying $375 million to its creditors next year and as much as $600 million in future years.

In return, the banks have agreed to reduce the country’s commercial debt by 49.2%, making the deal one of the most generous debt-reduction packages negotiated by the “London Club,” a group of commercial lenders.

“This is a big deal for Poland,” said Markus Rodlauer, chief of the Warsaw office of the International Monetary Fund, which has agreed to help Poland cover the $1.9-billion initial cost of the deal. “This should be the final chapter in the country’s normalizing relations with its creditors.”

Negotiators from both sides said they were under intense political pressure to reach an agreement because of a decision three years ago by Western governments to cut Poland’s non-commercial foreign debt by about 50%, but only if commercial lenders agreed to do the same. The “Paris Club”--a group of government lenders--was eager to ease Poland’s payment obligations to help soften the transition to a market economy.

“Both sides, let’s say, suffered to a certain extent from the politics,” said Ernst-Moritz Lipp of Dresdner Bank, chief negotiator for the London Club.

Analysts said the turning point in the most recent phase of negotiations, which has lasted four years, came last fall when the chairmanship of the negotiating team passed from U.S. to European banks.

Polish negotiators complained that non-European commercial lenders treated Poland as “a place they knew only from a computer screen,” whereas European banks, particularly those in Germany, showed a far greater interest in the country.

Reflecting that attitude, Bernhard Walter, a board member at Dresdner Bank, which shares the chairmanship with Lloyds Bank, said at the ceremony Wednesday that “we want to be there to help” as Poland’s doors to foreign investment swing open.

E. Michael Hunter of Lloyds Bank also welcomed an expected surge in foreign banking activity.

Of the $14 billion owed by Poland to foreign commercial lenders, $8.7 billion was unpaid loans made to the Communist government in the 1970s, $1.1 billion was outstanding revolving credits from 1983 and 1984, and $4.2 billion was overdue interest accrued over the past five years.