Created: 1/14/1981

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POLAND: Economic Priorities

ito Land'a economic goals revealed in the plan1 are dictated by the overriding need to calm worker unrest in order to keep the Soviet* out and get the country back^to[the eireuotetanota, Poland cannot present Western creditorso-

herent program* Warsawis relying on Western governmente to pro-

vide politically motivated aid to help pay ite ietport bill and

oover ite financial obligations. 9MMf :

In line with the commitments it has madeorkers since midyear; the regime projects largefi&sW$>fa In money income cor all segments ot therastic cuts into free resources for otherare planned, but investment.in

housing and spending on health, educational,

facilities are scheduled to rise.

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.The leadership evidently is determined to holdon consumer prio articularly those for

Finance Ministerhe legislature thatfor food will rise byercent1 tohigher prices for farmers and to keep retail prices For the first time under the Communists,' udget projects an excess of expenditures.

revenues, as only token measures to hold down government spending are,

Horo Economic Drift

While Warsaw demonstrates its sensitivity to popular'concerning pay, hours uf work, and union rights, economy continues to drift. What theto the legislature last woek was not soplanollection of goals and predictions. Aplan will not be completed until springearliest.


The government haa warned that national income will again fallt it didnd that industrial production will at best equal the level Although Planning Chief Kisiel says the avail- bility of consumer goodshole will riseercentupplies of meat and other foodstuffs are.likely to fall. Inflationary pressures will be severe again, because the increase in consumer goods supplies will be far less thanpercent risein personalm

Balance of Payments

Warsaw has reduced the priority it gives toPoland's international financial position. The hard currency balance-of-trade deficit0 probably totaled at5 billion, and an even larger hardikely ssm>

The leadership seems -

The value of imports ls certain to rise sincethe adverse political impactecline of imports on consumption andstrive to maintain real imports at least at current levels. -Meanwhile, the outlook for exports is gloomy because of production bottlenecks and the need to keep coal and ood at home, fjfh

trade and

Polish officials recognise that meeting borrowing requirements of this magnitude will require massiveign aid, and they have been scrambling to line upfor several months. Poland has already received overillion in aid from theof whichsed inandew hundred million dollars from other Bast European countries. Warsaw also is requestingillion in various types of assistance from Western governments, mostly bilateral reschedulings and government-backed credits. bbbbbV

nzd e:

Few commitments have been received, althoughcountries have been generally syTPutlratla tofor aid because of the contribution that aid can to political stability, in Poland and to the prof ita-'vV"domestic exporters. Poland's failure to winof large amounts of assistance is partly dueinability of Western countries to

plan for aiding Warsaw and to Western doubts that Poland ever put its finances in order.

Even If politically motivated labor strife subsidesime, the potential for civil unrest willver the next several months.as economic conditions worsen. Warsaw is unlikely to receive as much aid as it eeds, and the aid provided will be slow ino-mestically, investment cuts will not quickly permitreases in the supply of consumer goods, .and thei concea-sions won by the workers will also hinder production, ess*

The population has tolerated considerablehowever, and thereeasonable chance that . mood of acceptance will continue for at least sev-

eral more months. fK**>

Economic Activity

Warsaw announced this week tnat livestock inventories on privateraise three-fourths of thes cattle andfallen substantially. results of the census in January indicate that the number of cattleercent fron levelsear ago, while hogs declinedharpest drop since the. faw%%

Two consecutive poor grain harvests coupled with

thi- year's disastrous fodder crops caused the decline.

The Poles expect meat production to fall by at least

ercent1 after anercent drop . fff***

Since Poland apparently is reluctant to cut meat exports for fear of losing markets and planned meatwill not be sufficient to offset lower production, per capita consumption will fall below the levelhortages of other foodstuffs will compoundover meat shortages, SjsS>

Military Exercises Scheduled

The Soviets and their Warsaw Pact allies area portion of their troop training cycle in which the high levels of exercise activity in Eastern Europelate January and late March will complicate our ability toning of an impending military We balieve, however, we would be able to distinguish this activity from normal training because of the greater sizearge intervention force, the communications network necessary to control it, and the extensive mobilization and logistic preparations involved.

Tbe Soviets are also expected to conduct exercises

involving their front and theater forces in the western

USSR during February and Merch. These General Staff -

controlled exercises typically include field training

and the tesfcing_pf_nqw equipment, tactics, and command echelons.


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