EASTERN EUROPE: Difficulties in Obtaining Credit
east European countries arc hcving increasing difficultyWestern loans, and Hungary, hast Germany, and eefh6dul^ dsbts by the end of the year,Poland and Romania. The import reductions forced by thacredit will, at the least, depress domestic growth andin all five of these countries and have seriousfor political stability in some. Only Bulgaria and because of their polioies of financial conservative,for the time being. The USSR, facing serious problemsown, will not be able to provide enough Help and, in foot,the problem by cutting oil deliveries.
The poor climate for borrowing faced byfor moreear results from bankers' of the creditworthiness of the countriesareaonsequence of the Polish andcrises and tho growing concern overeconomic problems in general. No Eastcan nowyndicated hard currencyWestern bankers, and bankers are refusing todebts as they come due. Even the exportof some Western governments are not willinqtheir lending. "
Eastern Europe's borrowing problems would increass if Western governments were to Join the bankers laloans they make available. This would proopt the jnkers to curtail their loans further to Eastern Europe.
Although Poland's private debt rescheduling agreement1 apparently will be signed soon, it cannot hope toarge trade surplus or to obtain enough debt relief and credits to cover its debt service obligationsillion Even if Poland manages to avert
default, its financial problems are likely to damaae thP creditworthiness of other East Europeanolish default would delay and make even more difficult theth| other countries to Western capital
e?innin9 to negotiate theof its private debt. Even with debt relief, how-
Romania cut faw areas
!^hff"ttM?uXdar*fcbetween available funds and its minimum requirements.
East Europeans rely on Western credits to strengthen and expand their economies and to assort some independence from the Soviets. Loss of credit would cause agricultural and industrial output to decline and fewer consumer goods to be available, in most of these countries, the public wouldall In livlnq
!,ri^bUt in Romania and Yugoslavia the population will add this problem to an increasing list of other
mem Some regimes may reluctantly decide to turn to the USSR Tor help, but Moscow will be able to offer little, because it faces serious economic constraints of its own in fact, the USSR is cutting back on deliveries of oil to Czechoslovakia, East Germany, and Hungary