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Poland
Score Rank
Financial Standards Index 48.33 out of 100 40
Business Indicator Index 8.48 out of 12 53

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Overall Standards Summary

Poland achieves medium overall compliance with international standards and codes, with a score of 48.33 out of 100 in our Financial Standards Index. Poland has its highest overall compliance in the Macroeconomic Policy and Data Transparency area. There Poland achieves Full Compliance with the Data Dissemination standard and Compliance in Progress for both Monetary and Fiscal Transparency. The Payment Systems standard is the only other standard for which Poland is given Full Compliance. Poland is moving towards convergence with international auditing standards, and the legal framework of its corporate governance structure is in line with the principles set forth by the Organization for Economic Cooperation and Development. Poland also continues to move forward with reforms to its insolvency framework. Since the establishment of the Polish Financial Supervision Authority as the integrated supervisor there has not been an assessment of banking or insurance supervision practices with international standards, which has led to a designation of Insufficient Information for these two standards.

Choose a standard for a detailed compliance report:
12 Key Standards for Sound Financial Systems

Compliance Level
Special Data Dissemination Standard
FC
Code of Good Practices on Transparency in Monetary Policy
CP
Code of Good Practices on Transparency in Fiscal Policy
CP
Effective Insolvency and Creditor Rights Systems
ID
International Financial Reporting Standards
NC
Principles of Corporate Governance
EN
International Standards on Auditing
ID
Anti-Money Laundering/Combating Terrorist Financing Standard
ID
Core Principles for Systemically Important Payment Systems
FC
Core Principles for Effective Banking Supervision
II
Objectives and Principles of Securities Regulation
EN
Insurance Core Principles
II
II = Insufficient Information | NC = No Compliance | ID = Intent Declared | EN = Enacted | CP = Compliance in Process | FC = Full Compliance

Macroeconomic Policy and Data Transparency

FCSpecial Data Dissemination Standard

Poland became a subscriber to the International Monetary Fund's (IMF) Special Data Dissemination Standard (SDDS) in April 1996 and started meeting the IMF's SDDS requirements on March 2, 2000. The SDDS website discloses that Poland meets the requirements for periodicity, coverage, and timeliness of data, although it does employ the flexibility option for timeliness for general government (public sector) and central government operations. Further, Poland also fulfills SDDS requirements, where applicable, for the access dimension. Poland also appears to meet all SDDS requirements for integrity and quality of data. Confidentiality is assured by law. Poland provides summary methodologies for all datasets. The IMF's 2009 Article IV Consultation notes that Poland has continued to make progress in improving its data dissemination regime, and calls Poland's data "adequate for surveillance."

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CPCode of Good Practices on Transparency in Monetary Policy

In 2006, Oxford Analytica published its last annual update on monetary policy transparency in Poland, in which it awarded the country an overall rating of "Compliance in Progress." OA credited Poland's efforts to achieve European Union (EU) membership, as well as with the obligations arising from that membership (achieved in 2004) with providing much of the impetus for the country's progress toward monetary policy transparency. The International Monetary Fund (IMF) carried out a Financial Systems Stability Assessment on Poland in 2001, in which it also looked at the country's monetary policy transparency practices. The report recognized that the National Bank of Poland (NBP) expended great efforts to serve the cause of transparency, even to the extent of revealing its decision-making process. The NBP Act clearly lays out the roles and responsibilities of the individuals and agencies involved in setting and implementing monetary policy. However, a few areas remain where improvements could be effected. More detail could be provided in certain areas of reporting, such as the mechanisms by which the NBP handles profit retention and capital maintenance. The IMF also recommended that the NBP make public its internal governance policies, and should regularly include a statement of accounting policies with its published financial statements. At present, Poland remains committed to joining the euro area in 2012, at which time it will give up its independence in monetary policy formulation, taking its lead instead from the European Central Bank.

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CPCode of Good Practices on Transparency in Fiscal Policy

In 2006, Oxford Analytica (OA) published its last Report on Fiscal Transparency in which it rated Poland's overall compliance with the Code of Good Practices for fiscal policy transparency as "Compliance in Progress." OA noted that, in previous years, Poland had made remarkable strides in its efforts to converge with international best practices in fiscal transparency, motivated strongly by its efforts to join the European Union (EU) – which it successfully achieved in 2004. A series of International Monetary Fund (IMF) publications document this progress. In 2001, the IMF conducted a fiscal transparency Report on the Observance of Standards and Codes (ROSC) for Poland. This ROSC was updated twice – in 2003, just prior to Poland's European Union (EU) accession and in 2004, after accession was achieved. At the time of the original ROSC, Poland was praised for making significant progress toward improving its fiscal transparency practices, but the IMF noted that many problems remained, particularly with regard to practices involving local governments and the country's many extrabudgetary funds. By 2004, Poland had carried out a number of reforms, many inspired by the need to comply with EU requirements. Legislation had been passed to streamline the tax system and taxpayer offices were established to provide guidance to taxpayers. The Ministry of Finance's website offers broader access to English-language fiscal reports and statistical data. In addition, a program of consolidation of extra-budgetary funds and legislation curtailing many of the fiscal abuses associated with them is ongoing. According to the IMF's 2009 Article IV Consultation report, the global economic downturn led to a stalling of the consolidation program, and the IMF urged Poland to put in place measures to increase confidence in medium-term fiscal consolidation targets.

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Institutional and Market Infrastructure

IDEffective Insolvency and Creditor Rights Systems

Prior to becoming a member of the European Union (EU) in 2004, Poland enacted a new Law on Insolvency and Restructuring in 2003 to replace the previous Bankruptcy Law of 1934. The new law was intended to bring Poland's regime into closer alignment with EU regulations. The 2003-2004 Insolvency Law Assessment Project commissioned by the European Bank for Reconstruction and Development's (EBRD) assigns Poland's insolvency legislation an overall "medium" score on compliance with international standards established by international organizations, including the World Bank. The EBRD's 2006 publication "Commercial Law of Poland" affirms the conclusions of the Insolvency Law Assessment Project regarding the level of compliance of Poland's insolvency regime with the international standards but expresses concern whether any of the positive attributes of the insolvency regime can be implemented. The report cites the conclusions of the 2004 EBRD Legal Indicator Survey which examined the "effectiveness" of the insolvency regimes. The results of the Survey revealed that with regard to the practical application of the insolvency law, both creditor and debtor initiated insolvencies can be problematic. The 2006 EBRD report states that Poland is in need of improved professional training for insolvency professionals and recommends a reform of the legal sector to promote the rescue of fundamentally healthy companies. In 2009, the U.S. Department of Commerce reported that Poland continued to move forward with insolvency reforms, and an International Finance Corporation news release in that year asserted that Poland was among the Eastern European and Central Asian countries that were leading the world in insolvency and credit reforms. According to the release, Poland amended its bankruptcy law in 2009 to permit the option of reorganization prior to bankruptcy.

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NCInternational Financial Reporting Standards

In line with the European Commission Regulation No. 1606/2002, listed companies in Poland are required to use International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) in their consolidated accounts beginning January 2005. All banks in Poland are also required to apply IFRSs in their consolidated financial statements, according to a 2008 European Commission report. Apart from the mandatory application of IFRSs, Poland permits IFRSs in the annual accounts of listed companies as well as in the consolidated and annual accounts of all other companies that have either filed for admission to public trading or are a subsidiary of a parent which prepares its consolidated accounts in accordance with IFRSs. Companies that choose not to apply international standards prepare financial statements in accordance with the Polish requirements primarily contained in the Accounting Act, which incorporates provisions set out in the Fourth and Seventh EU Company Law Directives. The 2005 World Bank assessment commends the Polish authorities for the progress achieved in reforming financial reporting requirements. However, significant differences remain between the Polish requirements and IFRSs, as pointed out by a number of publications on the subject. As per a 2009 PricewaterhouseCoopers report on IFRS adoption by country, the Polish standard setting body has not announced any convergence plans.

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ENPrinciples of Corporate Governance

In its 2003 Corporate Governance Sector Assessment Project, the European Bank for Reconstruction and Development (EBRD) observed that corporate governance legislation in Poland was in "high compliance" with the Organization for Economic Cooperation and Development (OECD) Principles of Corporate Governance. A World Bank assessment conducted in 2005 confirmed that the Polish corporate governance framework complied with many of the OECD Principles and observed that Poland had adopted new legislation, implemented a corporate governance code, and strengthened its regulatory and enforcement regime. Nonetheless, the World Bank assessment identified deficiencies in regulation of pension funds, weaknesses of supervisory boards, problems in delisting procedures, and inadequate approvals of related-party transactions. A 2006 EBRD assessment further stated that minority shareholder disclosure procedures were found to be "complex" and enforceability was problematic. Some of these issues have since been addressed. According to a 2007 EBRD report, under the Warsaw Stock Exchange (WSE) Council resolution of July 2007, the updated corporate governance code became a mandatory part of the WSE rules. Listed companies are required to disclose compliance with the Code on a "comply-or-explain" basis. Poland has also adopted the International Financial Reporting Standards for application in consolidated financial statements of listed companies.

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IDInternational Standards on Auditing

According to a 2009 International Federation of Accountants (IFAC) publication, auditors in Poland are required to use Polish auditing standards developed by the National Chamber of Statutory Auditors (KIBR); in matters not covered by the national standards, International Standards on Auditing (ISAs) as issued by the International Auditing and Assurance Standards Board (IAASB) are followed. Per this IFAC report, ISAs have been translated into Polish since 1996 and the latest version of ISAs issued as a result of the Clarity Project has also been translated. The IFAC report, as well as a 2006 KIBR self-assessment, observe that Polish auditing standards are primarily based on the ISAs. However, in its 2005 assessment the World Bank finds national auditing requirements to be an "abbreviated" and "incomplete" version of international standards and recommends the wholesale adoption of ISAs in Poland. Polish auditing practices, however, are likely to change with the implementation of the European Commission (EC) Directive 2006/43/EC, which is expected to require application of ISAs by all member states. Per a 2009 EC publication, Poland has fully transposed the above-mentioned Directive into its national legislation. In its Action Plan prepared in 2008 as part of the IFAC International Member Body Compliance Program, the KIBR states that it will develop an action plan to support the adoption and implementation of ISAs in Poland and reiterated its commitment to convergence with the IAASB pronouncements.

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IDAnti-Money Laundering/Combating Terrorist Financing Standard

The Committee of Experts on the Evaluation of Anti-Money Laundering Measures (MONEYVAL) conducted a mutual evaluation of Poland's anti-money laundering and combating the financing of terrorism (AML/CFT) regime in 2006 and released its findings in a 2007 report. In this report, the evaluators concluded that Poland is fully or largely compliant with only 18 of the 40+9 Financial Action Task Force (FATF) recommendations (R) and special recommendations and is non-compliant with 11. The same report observed that although Poland has made significant improvements in its AML regime since its last mutual evaluation in 2002, its overall AML/CFT framework is lacking when assessed against the FATF's requirements. Poland was assessed to be either partially or non-compliant with all of the FATF's core recommendations with the exception of R1, for which it was rated as largely compliant. In 2008, the MONEYVAL released a progress report on the measures taken by the Polish authorities based on the recommendations of the 2007 mutual evaluation. The progress report takes note of specific developments in the areas of investigations and suspicious transaction reporting (STR). It also highlights that a number of recommendations will be fulfilled when the Polish parliament adopts the draft legislation amending the current AML Act. However, the progress report does not assign updated compliance levels to any of the FATF's 40+9 recommendations. Therefore, there remains no updated publicly available information addressing Poland’s compliance with the FATF requirements. The FATF, in its 2008-2009 Annual Report, names Poland as one of the jurisdictions that have endorsed the FATF's 40+9 recommendations.

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FCCore Principles for Systemically Important Payment Systems

Until recently, Poland's systemically important payment systems consisted of the large value interbank payment system, SORBNET, and the retail payment system, ELIXIR. SORBNET was Poland's component of the Trans-European Automated Real-time Gross Settlement Express Transfer (TARGET) system, the pan-European payment system. However, in November 2007, TARGET2 replaced TARGET and payment services were harmonized under a single shared platform across its member countries. Poland joined TARGET2 with the final wave of countries in May 2008. Furthermore, with the introduction of a settlement guarantee by Poland’s clearing house in 2004, ELIXIR was no longer systemically important. Thus, TARGET2 is now Poland’s sole systemically important payment system. According to a 2009 European Central Bank assessment of TARGET2 against the Core Principles for Systemically Important Payment Systems (CPSIPS) promulgated by the Committee on Payment and Settlement Systems, TARGET2 observes all CPSIPS. Information from various sources also indicates that Poland's central bank, the National Bank of Poland clearly identifies its responsibilities in the supervision of payment systems in the country.

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Financial Regulation and Supervision

IICore Principles for Effective Banking Supervision

Accession to the European Union (EU) has been the key driving force behind Poland's financial sector development because it contributed to improvements in the regulatory framework, according to the International Monetary Fund's (IMF) 2006 Article IV Consultation report. Moreover, the U.S. Department of Commerce, in its 2008 Country Commercial Guide, states that the Polish banking system is among the best in Central and Eastern Europe in terms of regulation and supervision. In its 2001 Financial System Stability Assessment for Poland, wherein the IMF also assessed the country's observance of the Basel Core Principles (BCPs) for Effective Banking Supervision, the IMF concluded that the Commission for Banking Supervision had adopted and effectively implemented a clear set of goals and objectives through supervisory strategies and through on-site and off-site examinations. While most of the essential prudential regulations and requirements were in place, the assessment found that compliance with the regulatory framework was not complete. The Act on Financial Market Supervision was adopted in September 2006, establishing a new integrated financial supervision authority – the Polish Financial Supervision Authority (PFSA) – for the insurance, securities, and pension fund sectors. Since January 1, 2008, banking supervision has also been carried out by the PFSA. Further, the banks are also obliged as of the same date to implement Basel II, and Poland is working towards harmonizing its legal, regulatory, and accounting systems with those in the EU. Subsequent to this change in the supervisory authority and regulatory framework, there is not much information publicly available regarding Poland's compliance with the BCPs, although the 2006 IMF report mentions good progress made by Poland in implementing the 2001 recommendations.

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ENObjectives and Principles of Securities Regulation

The European Bank for Reconstruction and Development, according to its 2006 report on Commercial Laws, assessed in 2004 the securities market legislation in Poland against the International Organization of Securities Commissions (IOSCO) Objectives and Principles of Securities Regulation and found Poland to be in "medium compliance." In 2001, according to International Monetary Fund's (IMF) Financial System Stability Assessment of the same year, securities regulation in Poland already complied with most IOSCO Objectives and Principles. Areas where compliance could be strengthened were reasonably minor in importance. The EBRD's 2006 report attested that a 2005 update of Poland's securities markets legislation showed dramatic improvement in the already relatively sound Polish legal framework. Accession to the European Union has been the key driving force behind Poland's financial sector development, as it contributed to improvements in the regulatory framework, according to a 2006 IMF report. In September 2006, a new, integrated financial supervision authority - the Polish Financial Supervision Authority (PFSA) – was established for the securities market, insurance, and pension funds sector with the enactment of the Act on Financial Market Supervision. Since January 1, 2008, banking supervision has also been carried out by the PFSA. A comprehensive assessment of securities market legislation in Poland conducted by the EBRD in 2007 after the PFSA started operation and the new regulatory framework came into place reveals that Poland’s securities legislation is compliant with the IOSCO principles to a very large extent. However, weaknesses were identified in the areas of operational independence of the PFSA; oversight of self-regulatory organizations; fair and equitable treatment of shareholders; accounting standards for issuers; entry criteria for market intermediaries, management of large exposures by intermediaries, and procedures for dealing with market failures; and the PFSA’s oversight of trading systems and corrective action against unfair trading practices.

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IIInsurance Core Principles

Accession to the European Union has been the key driving force behind Poland's financial sector development, as it contributed to improvements in the regulatory framework, according to the International Monetary Fund's (IMF) 2006 Article IV Consultation report. In 2001, the IMF conducted a Financial Sector Assessment Program of Poland's observance of the Insurance Core Principles (ICPs) developed by the International Association of Insurance Supervisors (IAIS) in 2000. The IMF reported its findings in its 2001 Financial System Stability Assessment, which concluded that Poland broadly observed the ICPs and that the regulation and supervision of the insurance sector had been significantly strengthened. Weaknesses were identified with regard to the powers and independence of the supervisory agency; frequency of on-site inspections; corporate governance practices; and exchange of information with the domestic and foreign counterparts. At the time of the assessment, supervision of the insurance sector was conducted by the State Office for Insurance Supervision, which was replaced by the Insurance and Pension Funds Supervisory Commission in 2002. The Act on Financial Market Supervision was adopted in September 2006, establishing a new, integrated financial supervision authority - the Polish Financial Supervisory Authority (PFSA) - for the insurance, securities market, and pension funds sector. Since January 1, 2008 banking supervision has also been carried out by the PFSA. Given the revision in October 2003 by the IAIS of the ICPs and methodology, and the change in Poland's supervisory and regulatory framework in 2006, there is insufficient information publicly available regarding Poland's compliance with the new, more stringent ICPs. Nonetheless, a 2008 report by the PFSA in the wake of the global financial crisis, notes that the PFSA has stepped up its vigilance, is working towards applying a risk-based supervisory approach, and is monitoring the entities’ readiness to implement Solvency II through revamped risk management and internal control systems.

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Business Indicators

With an overall score of 8.48/12, Poland is progressing toward standard on the economic, legal, and political indicators that make up our Business Index. Poland has a market-based economy and there are few state-owned enterprises. Poland became a member of the European Union in 2004. Since then it has seen a strong per capita rate of economic growth, with rising incomes and falling rates of inflation and unemployment. Poland has also experienced fewer setbacks during the global economic crisis than many of its peers. There are no laws that limit or prohibit foreign investment, participation, or control, outside of certain strategic sectors. Property rights are well defined, however, foreigners are not permitted to buy land. Corruption is not a major concern as reflected in Poland's rank of 49th out of 180 countries in Transparency International's 2009 Corruption Perception Index.

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Global Indices & Quick Facts

Poland is ranked from the 1st to the 3rd quintile in the global indices benchmarking political, economic, business, and human capital climates, as shown below. On the one hand, Poland is categorized as a country with a consolidated market-based democracy by the Bertelsmann Transformation Index. On the other hand, economic and business freedom are hindered by government size, restrictive labor regulations, and tax regulations, as highlighted both by the Heritage Foundation and Global Competitiveness Indices and, especially, the World Bank's Doing Business Index. The World Bank's Index highlights the multiple steps it requires to start a business and obtain necessary licenses as particularly cumbersome in Poland. Furthermore, the high perceived level of corruption, reflected in its low score in Transparency International's Corruption Perceptions Index, is noteworthy.

Name Year Rank Score Quintile
Bertelsmann Transformation Status Index 2010 10/128 8.86/10 1
Heritage Foundation Economic Freedom Index 2010 71/179 63.2% 2
Economic Freedom of the World Index 2009 74/141 6.78/10 3
World Economic Forum Global Competitiveness Index 2009 46/133 4.33/7 2
Milken Institute Capital Access Index 2009 42/122 5.51/10 2
World Bank Ease of Doing Business Index 2009 72/183 N/A 2
UNDP Human Development Index 2009 41/177 0.88/1 2
Transparency International Corruption Perceptions Index 2009 49/180 5/12 2
Freedom House Index 2009 Free 1/7

Credit Ratings

A-/Stable Fitch

A2/Stable Moody's

A-/Stable Standard & Poor's

Macroeconomic Data

2009 GDP (Current Prices): 423.0 billion USD (IMF)

2009 GDP (Per Capita): 11,098 USD (IMF)

2010 GDP (Growth Forecast): 2.2% (IMF)


2009 Inflation (CPI): 3.4% (IMF)

2008 Unemployment: 9.8% (CIA)


2008 Foreign Direct Investment

FDI (Inward): 16.5 billion USD (UNCTAD)

FDI (Outward): 3.60 billion USD (UNCTAD)


2007 Official Development Assistance

ODA (Received): N/A million USD (OECD)

ODA (Disbursed): N/A million USD (OECD)

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