Lending Development and Technical Assistance Activities

Principal Areas for Cooperation

World Bank assistance focuses on assisting Poland with three types of activities:   i) helping with preparation and implementation of complex multi-sectoral programs which include social mitigation aspects.   Our extensive involvement in Poland's coal sector restructuring, helping to develop a comprehensive program to create off-farm jobs in rural areas, and our possible assistance in railway restructuring, all fall in this category;   ii) provision of advice and recommendations on specific public sector reforms as well as on EU accession related issues.    This has involved the Bank in advising, for example, on reforms in public finance, implementation issues connected with regional government reform, power sector consolidation and privatization, developing an approach for assessing the impact of EU accession on key sectors, and carrying out an analysis of the cost-effectiveness of social programs in education, health and social protection; and  iii) development of projects and other initiatives linked to specific development concerns.    These include projects in the environment area (improving on-farm environmental management, use of geothermal energy, and promoting energy savings investments), continuing support for reforms in the social sectors, and facilitating private investment in infrastructure, including support for restructuring of the transport and energy sectors. 

Non-lending services constitute a significant part of the work program, with most of the World Bank's institutional development and policy advice provided in the form of informal technical  notes and papers and through workshops and seminars.  The World Bank's new office location in Warsaw has excellent conference facilities, including simultaneous translation and video conference equipment.      

Major On-going Activities

Creating Off-Farm Employment Opportunities
Poland's rural sector faces major challenges as it strives to modernize and prepare for EU accession.  This requires actions to increase agriculture productivity, upgrade production and infrastructure, and tackle poverty and high unemployment in certain regions.   One important goal is to facilitate the creation of jobs outside of farming, both to lower the existing high level of rural unemployment, but also to make it easier to shift more labor out of agriculture.  This is critical for improving competitiveness and productivity in the farm sector.   At  the Government's request,  the Bank is preparing a major rural development initiative which focuses on training and skills development, building capacities of sub-national levels of government, investment in basic infrastructure, and institutional  and policy reforms to make private investment more attractive.  Activities to be financed under the program would be implemented at the local government level and would be  co-financed from the EU pre-accession SAPARD facility.   Preparation of a first loan of about US$100 million to support this initiative is well advanced, with the goal of starting the project in early 2000.    

Coal Sector Restructuring
The Bank has agreed in principle to provide up to US$1.0 billion over the next several years to support the government's Hard Coal Sector Restructuring Program.  This Program aims at restoring the financial health and competitiveness of the coal industry by closing uneconomic mines, rationalizing employment levels, strengthening company management, and restructuring mine company finances.  It would also improve environmental performance.  The Program includes financing for generous social packages to provide transitional financial assistance to miners being laid off, coupled with support for retraining and business development. The Bank is working closely with Government and the mining companies to provide technical support, help monitor Program implementation, and prepare the Bank's financial assistance.    This assistance is mainly provided through a series of fast disbursing sector adjustment loans (SECALs) which the Government will use to finance a significant share of the social costs of the restructuring.  The first  SECAL in an amount of US$300 million was approved in June 1999 and a second SECAL in September 2001.  A proposed investment loan to support mine closures, labor adjustment measures  and  environmental improvements for a specific mining company is also under consideration.

Implementing Social Sector Reforms
The Bank places high priority on assisting the major reforms in pensions, health and education which the Government is in the process of implementing.   The Bank together with other donors provided technical advice during the preparation phase of the pension reform, including support for seminars and workshops to discuss reform options and gain public support.   We are currently helping the Social Security Agency (ZUS) to prepare several studies which will determine additional ZUS restructuring needs and could result in a request for Bank financial support.  In the health sector, initial support for sector reform is being provided under the on-going Health Services Development Project and the Ministry is exploring with us the possibility of new lending to support the reform effort.  We are also working with the Ministry of Education on a possible program of technical and financial assistance to support implementation of reforms to restructure and modernize the education system. Initial Bank assistance to improve the quality of ruraleducation is included as part of the proposed Rural Development Project

MeetingEnvironmental Targets

Despite good progress since 1990 in reducing environmental constraints, Poland must make further sizeable investments in infrastructure and further strengthen environmental monitoring and management if it is to meet the environmental requirements of EU membership.    The Bank finances investments in infrastructure to help Poland meet its environmental goals, helps develop non-polluting energy sources, and provides technical advice in developing a least cost approach to investments in the sector.  Upcoming projects may include:  (i)  a proposed US$2.5 million loan for a Rural Environmental Protection Project (already negotiated) to help finance a pilot project to promote environmentally sensitive farming practices, including tackling pollution from farm waste to reduce heating costs ; (ii) assisting the Silesian regional government to strengthen environmental monitoring and compliance activities and helping households convert small coal-fired boilers to cleaner fuels, thus helping the region move toward complying with EU environmental standards and improving health status; and (iii) helping southern Poland to achieve environmental sustainability by developing geothermal capacities to replace polluting fuels with clean air technologies.

Transformation of the State and Strengthening Public Administration

Poland continues to pursue a variety of initiatives to complete the restructuring and transformation of its public sector and strengthen public administration.  On-going efforts include the restructuring and privatization of loss-making public enterprises (such as coal and the railways), upgrading the quality of public sector service delivery (including the reforms in the social sectors), and improving the way the public sector is managed.   Key reforms involve changes in the structure of local and regional government to increase responsiveness to local concerns, efforts to upgrade the capacity of public administration and establish sound public finances and measures to reduce red tape and bureaucratic regulations and combat corruption.     

Bank assistance in the broad area of public administration focuses on analyses of the impact of EU accession in areas such as the environment, transport and taxation;  an assessment of budgetary impact and effectiveness of programs in health, education and social protection;  development of regulatory institutions, especially in the energy sector, and further support for restructuring and privatization through support for the coal program, possible support for railway restructuring, and financing of privatization studies and activities under the on-going Privatization and Restructuring Project.   The Government has also looked to the Bank for assistance in developing an anti-corruption program;  initial studies in this area are underway.