WARSAW — Seven years into a trying economic make-over, Poles are discovering that the free market can also be fun--even if it sometimes means living beyond their means.
New car purchases in 1996 soared 41%, the largest annual increase among European nations for the year. Sony Corp. reported a doubling in sales of televisions, VCRs and video cameras. A record 2 million passengers flew on state-run LOT Polish Airlines, while 6,000 high-priced cellular telephones were snatched up during their first week on the market.
How is such self-indulgence possible when the average Pole last year earned the equivalent of $3,840?
"They say I can have the money with nothing down," said Robert Bylinka, a camera repairman negotiating a new car loan at a major bank here. "And I can take three years to pay it back."
After decades of a rigid pay-as-you-go economy--big purchases were typically bankrolled with cash stashed away over time under mattresses--a sudden surge in kredyty has unleashed a nationwide buying binge.
The total amount of personal loans outstanding grew by more than 75% last year, with one in every three Polish families now in debt, according to a recent public opinion survey. The average loan last year was five times larger than in early 1995, yet banks report an insignificant default rate.
Until recently, inflation was so high, the economic outlook so uncertain and financial institutions so inexperienced that the idea of Poles rushing to the bank to finance anything was unimaginable. Economists say the gush in consumer credit reflects the economy's increasing sophistication as well as unprecedented public optimism about the future.
"There is a great psychological change occurring," said Leszek Zienkowski, an economist at the Polish Main Statistical Office. "The fact is that the new generation is entering its 30s, and their outlook is completely different. They believe incomes will continue to rise, that things will continue to get better."
Things certainly have gotten better--household incomes increased about 7% above inflation last year--but fears are also growing that the spending spree has gone too far. Hanna Gronkiewicz-Waltz, president of the Polish National Bank, which sets monetary policy, has called the consumer credit boom an epidemic that must be eradicated, most likely through higher interest rates.
Central bankers are concerned because savings have not kept up with borrowing, and spending has outpaced economic growth. The trend is inflationary, they say, and contributes to the country's deepening trade deficit. In the end, the bankers warn, the economy could be undone by its own success.
The National Bank's dour warnings have not been popular with the government, which faces parliamentary elections this fall and is eager to cash in on the economy's feel-good factor. Prime Minister Wlodzimierz Cimoszewicz and Finance Minister Grzegorz Kolodko have warned the bank against overreacting, a sentiment shared by many ordinary Poles.
"We saved for the last 40 years, and nothing came of it," said Bogdan Skorko, a Warsaw sales manager who borrowed nearly $7,000 last year for a vacation to Spain, furniture, a television and a stereo system. "A man doesn't just live to save but also to live well."
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Borrowing on the Rise
Value of outstanding personal loans in Poland:
Dec. 1996: $4.08 billion
* Dollar values vary slightly from actual Polish zloty values because of exchange rate fluctuations
\o7 Source: National Bank of Poland\f7