Poland Table of Contents
Within one month, stores were well stocked, and the long lines in front of them had disappeared. Individual budgets rather than the availability of goods became the primary determinant of buying patterns. A large number of street vendors appeared, contributing to the supply of consumer goods and competing with established stores. This new type of enterprise often was the starting point for launching more established business units.
Besides income policy, the new government used highly restrictive monetary and fiscal policies to reduce aggregate demand. The reorganized central bank drastically limited the quantity of money by imposing a positive real rate of interest, introducing and subsequently increasing obligatory reserve ratios for the commercial banks, and imposing caps on credits (see Banking and Finance , this ch.). The budgetary deficit in 1989 had been equal to 11 percent of expenditures. In 1990 this deficit was converted into a surplus of 1.3 percent of expenditures. The surplus then began to decline, however, in the second half of the year, and by the spring of 1991 negative economic factors had again created a large deficit. The government eliminated most enterprise subsidies from its budget and introduced specific tax reductions to force state enterprises to depend on their revenues. In the many cases where the government action threatened their operations, state enterprises gained time by developing a system of interenterprise credits, selling some extra equipment and materials, and obtaining extensions for the payment of taxes and debts.
Data as of October 1992