a12-54_sb.htm

USE OF PROCEEDS

Unless otherwise indicated in the relevant prospectus supplement, the net proceeds from the sale of securities will be used to finance Poland’s State budget borrowing requirements or for general financing purposes. See “Public Finance”.

THE REPUBLIC OF POLAND

Overview

Poland is one of the largest countries in Central Europe with a total territory (comprising land area, internal waters and territorial sea) of 322,575 square kilometers. Situated on the Baltic Sea, Poland has a coastline of 770 kilometers and is bordered by Germany, the Czech Republic, the Slovak Republic, Ukraine, Belarus, Lithuania and the Russian Federation. Poland’s terrain is comprised largely of lowlands traversed by its main river, the Vistula, with lakes, rivers and marshes across the northern and central regions, and several mountain ranges, including the Tatras, in the south. Poland has more than 92,000 square kilometers of forest (approximately 29.6 percent of Poland’s total land area) and 140,000 square kilometers of arable land (approximately 44.8 percent of Poland’s total territory).

With a population of approximately 38.2 million, Poland is also one of the most populated countries in Central Europe. Population density is estimated at approximately 122 persons per square kilometer, with approximately 60.9 percent of the population living in urban areas. Warsaw, the capital of Poland and its largest city, has an estimated population of 1.7 million. Seventeen other urban centers each have populations in excess of 200,000.

Poland is an ethnically and religiously homogeneous country. Approximately 98.0 percent of the population is ethnically Polish and speaks Polish. Germans constitute the largest minority group, numbering approximately 153,000 persons concentrated principally in Silesia. Smaller ethnic and national groups have cultural ties to neighboring states such as Belarus, Ukraine and Lithuania. It is estimated that approximately 88.4 percent of the population is Roman Catholic.

Constitution, Government and Political Parties

Background

After being partitioned by Russia, Prussia and the Austro-Hungarian Empire from the late eighteenth century to the early twentieth century, Poland re-emerged as an independent and democratic State after World War I. In September 1939, the German and Soviet invasions of Poland commenced six years of military, social and economic devastation. At the conclusion of World War II, the Yalta and Potsdam Agreements resulted in the subordination of Poland to the Soviet Union.

For the next 45 years, the Communist Party dominated the Government. Government policy during this period was guided by a program of nationalization of industry, expropriation of large private landholdings, central planning of the economy and the suppression of political dissent. In 1952, Poland adopted a constitution that institutionalized a Stalinist system of de facto one-party rule by the Communist Party. Political and economic crises occurred in the 1950s, 1960s and 1970s.

Solidarity, the first independent trade union in the Soviet bloc, was formed in 1980 and soon consolidated the growing popular discontent with the Communist Government. On December 13, 1981, in response to the threat of general country-wide strikes, the Government declared martial law and outlawed Solidarity. Martial law continued for 18 months until July 1983. In the following years, the Government attempted to implement incremental political liberalization (although Solidarity remained banned) and economic austerity, but the economy continued to falter.

In April 1989, the Communist Government and the democratic opposition led by Solidarity agreed to a power sharing arrangement and competitive elections to a bicameral parliament. In June 1989, the overwhelming victory of Solidarity candidates in elections for available seats in Parliament signaled the end of the political monopoly of the Communist Party. In May 1990, local elections were held in which Solidarity achieved a similar victory. In November 1990, the first free national election for President in the post-World War II era resulted in the election of Lech Walesa, who had played an historic role in the formation and leadership of Solidarity. In October 1991, the first free election for the entire Parliament was held. The last Russian troops, units of which had been stationed in Poland since the end of World War II, were withdrawn in 1993.

The Constitution and Political System

Under the Constitution adopted in 1997, a bicameral Parliament (comprising an upper chamber, known as the Senate, and a lower chamber, known as the Sejm) is elected for a four-year term in general elections. The Sejm consists of 460 members and the Senate consists of 100 members. Generally, electoral rules for the Sejm stipulate that a minimum of 5 percent share of the popular vote must be gained by a party (8 percent for party coalitions) to gain seats. All legislation must be approved by the Sejm and the Senate, and signed by the President. In addition, the Sejm has the power to overrule the Senate by an absolute majority vote and to overrule the President by a 60.0 percent majority vote comprising at least half the total number of deputies. The President, with the approval of either the Senate or the Sejm, may call a referendum on matters of fundamental importance to the country.

The Constitution also establishes the independence of the National Bank of Poland (the “NBP”), Poland’s central bank, which is charged with the responsibility of maintaining the value of the national currency, the Polish złoty. The Constitution also grants the NBP the exclusive power of setting and implementing monetary policy. Under the Constitution, the Government is prohibited from incurring loans or issuing guarantees or sureties if, as a result, public debt would exceed 60.0 percent of GDP. There are also certain budget-related requirements that apply if public debt exceeds 50.0 percent of GDP. See “Public Debt—Debt Management”. Moreover, since 1999, under the Constitution, a Budget Act may not provide for the financing of the budget deficit by the NBP. These limitations are intended to safeguard the fiscal health of the economy.

Under the Constitution, the President is elected by direct vote for a five-year term and may be re-elected only once. Presidential powers include the right to initiate legislation, to veto legislative acts and, in certain instances, to dissolve Parliament. The President’s power to dissolve Parliament is limited to instances where the Sejm fails to present the annual Budget Act for the President’s signature within four months of receipt thereof from the Government or where the Sejm fails to pass a vote of confidence in the Government following attempts to nominate a government in the manner provided in the Constitution. The President commands the armed forces, represents the State in its foreign relations, appoints the judges of the Supreme Court and nominates the Prime Minister as well as the president of the NBP, subject to approval by Parliament.

The Prime Minister is the head of the Council of Ministers and is responsible for forming the Government, which must then receive a vote of confidence from the Sejm.

Poland is divided into 16 provinces, known as voivodships. Each voivodship is represented by a provincial governor, or voivode, appointed by the Government, who represents the Government at the voivodship level. There are three levels of independent territorial self-government: voivodships, poviats and gminas. There are 16 voivodships at the upper level (where self-governing authorities are located alongside government-appointed voivods), 314 counties as poviats at the intermediate level and 2,478 basic units of locally-elected governments, known as gminas (including 66 cities with poviat status). Self-governing authorities are elected by popular vote. All of the self-governing entities are financially autonomous and independent of each other and of the Government. The Prime Minister may limit their activities only to the extent that their actions conflict with national law. The self-governing entities are financed by a share of national taxes and by their own revenues, such as local taxes and fees. The gminas are entitled under the Constitution to exercise powers that are not designated as powers of other public authorities.

Judicial authority is vested in the Supreme Court and appellate, regional and district courts. A separate Constitutional Tribunal has jurisdiction over all constitutional matters.

Current Government and Politics

The most recent presidential election concluded on July 4, 2010, after two rounds. The two competing candidates were Jarosław Kaczyński, of the Law and Justice (PiS) party and Bronisław Komorowski of the Civic Platform (PO) party (formerly the speaker of Parliament and acting

President since April 2010, following the death of the previous President in a plane crash on April 10, 2010). Bronisław Komorowski won the election with 53.01 percent of the votes and began his term on August 6, 2010.

The most recent Parliamentary elections were held on October 9, 2011. Following these elections the Civic Platform (PO) party received 39.18 percent of the vote, the Law and Justice (PiS) party received 29.89 percent of the vote, the Palikot Movement party received 10.02 percent of the vote, the Polish People’s Party (PSL) received 8.36 percent of the vote and the Democratic Left Alliance (SLD) party received 8.24 percent of the vote. In November 2011, the new government was formed, led by re-elected Prime Minister Donald Tusk and supported by the same coalition of parties that supported Mr. Tusk’s previous government prior to the general elections.

The following table shows a breakdown of the distribution of seats in the Sejm (by party) and the Senate (by caucus) as at May 23, 2012:

	Seats
Sejm
Civic Platform (PO)	206
Law and Justice (PiS)	135
Palikot Movement (RP)	43
Polish People’s Party (PSL)	28
Democratic Left Alliance (SLD)	26
Solidarna Polska (SP)	20
Unaffiliated	2
Total	460

	Seats
Senate
Civic Platform (PO)	63
Law and Justice (PiS)	29
Polish People’s Party (PSL)	2
Solidarna Polska (SP)	2
Unaffiliated	4
Total	100

The most recent local elections were held in November 2010 with votes spread between local committees and main political parties.

The next Parliamentary elections are expected to be held in 2015.

International Relations

Poland is a founding member of the United Nations, belongs to most international organizations and maintains diplomatic relations with 179 countries. In 1967, Poland joined the General Agreement on Tariffs and Trade (“GATT”), and is a member of the World Trade Organization (“WTO”), the successor to GATT. In 1986, Poland rejoined the International Bank for Reconstruction and Development, known as the World Bank, and the International Monetary Fund (“IMF”), having withdrawn its original memberships in 1950. Poland is also a member of the International Finance Corporation (“IFC”), and was a founding member of the European Bank for Reconstruction and Development (“EBRD”). In 1996, Poland was accepted for full membership in the Organization for Economic Cooperation and Development (“OECD”). Poland is also a member of the International Development Association (“IDA”), the Council of Europe Development Bank (“CEB”), and the European Investment Bank (“EIB”).

In November 1992, Poland signed an agreement on free trade with the member countries of the European Free Trade Association (“EFTA”). By 2001, in accordance with the terms of this agreement, Poland had removed tariff barriers for almost all industrial goods from EFTA countries.

On March 12, 1999, Poland became a member of the North Atlantic Treaty Organization.

European Union Membership

In December 1991, Poland signed the “Europe Agreement” with the European Community, now the European Union (“EU”), establishing a trade and political association between Poland and the EU. The Europe Agreement became fully effective in 1994, and on April 8, 1994, Poland submitted a formal application for full EU membership.

Poland and nine other candidate countries signed the Accession Treaty with the European Union (the “Accession Treaty”) on April 16, 2003 in Athens. The Accession Treaty was ratified by all EU members and candidate countries and came into force on May 1, 2004.

Accession to the European Union enabled Poland to participate in the EU legislative and decision-making process and made it bound by EU law (regulations, directives and decisions). Poland has become eligible to have representation in the European Parliament. For the purpose of European Parliamentary elections Poland is subdivided into constituencies, in the same manner as the United Kingdom, Ireland, Italy, France, Netherlands, Belgium and Germany. Following the European Parliamentary elections in 2009, Poland has 50 members of the European Parliament, with the majority members belonging to the Group of European People’s Party and the Group of European Conservatives and Reformists. As a member of the EU, Poland has to comply with the Stability and Growth Pact, which is a rule-based framework for the coordination of national fiscal policies in the economic and monetary union (“EMU”). It was established to safeguard sound public finances, an important requirement for the EMU to function properly. The adoption of the single currency (i.e., the euro) is required by the Accession Treaty and has been set as the objective of the Polish Government. Its adoption requires fulfillment of certain economic and legal criteria and participation in the Exchange Rate Mechanism (“ERM II”). Poland has undertaken to meet the relevant economic and legal criteria in the future, but no specific date has been established for adoption of the Euro.

Like all EU member states, Poland is subject to multilateral surveillance by the EU’s Council and obliged to prepare Convergence Programs on an annual basis. Each Convergence Program provides for monitoring economic developments in each of the member states and in the EU as a whole as well as consistency of economic policies with the broad guidelines set by the EU on a regular basis.

Poland is required to prepare an annual Convergence Program covering fiscal policy, Poland’s main assumptions underlying its economic outlook and an assessment of economic policy measures and their budgetary impact. This information is required to cover the current and previous year and include forecasts for at least the next three years. Poland published its Convergence Program update for 2012 on April 25, 2012. The Convergence Program update contains information on measures taken by the Government in order to comply with the EU Council recommendations for eliminating Poland’s excessive general government deficit. The objective is to reduce the general government’s excessive deficit in 2012 and to ensure long-term sustainability of public finances. The main element of consolidation is a strong tightening on the expenditure side. In 2011 an efficient reduction of expenditure growth and other measures on the expenditure side contributed to one of the biggest deficit reductions since the transformation (by 2.7 percentage points of GDP). This trend is expected to continue in the current year. After reduction of the excessive deficit, the Government will further consolidate public finances to reach medium-term budgetary objective (MTO) in 2015.

One of the most important issues in the early years of Poland’s membership of the EU has been to implement effectively projects co-financed by the EU. This is in line with the principle of European solidarity, which requires that the more affluent member states help less developed EU countries bridge the gap in their economic and social development.

From July to December 2011, Poland led the presidency of the Council of the European Union. During that period, Poland made efforts to steer the European Union towards exiting the economic crisis and creating conditions for faster economic growth. In this context, Poland focused on three fundamental priorities: “European integration as the source of growth”, “Secure Europe”, and “Europe benefiting from openness”. The key achievements of the Polish presidency included the adoption of the EU’s 2012 budget, the completion of the so-called “six-pack” (a package of new legislative

measures on economic and fiscal surveillance), as well as the signing of the accession treaty with Croatia.

Poland’s EU membership resulted in a major inflow of EU funds of approximately EUR 61.3 billion between May 2004 and January 2012 (mostly from structural funds for Cohesion Policy related initiatives and payments under the Common Agricultural Policy). Conversely, during that period Poland made approximately EUR 23.2 billion of “Own Resources” payments to the EU. The net inflow of EU resources amounted to approximately EUR 38.0 billion and is projected to rise in 2012 and in subsequent years mainly because of the progress in implementing the operational programs of the EU’s Cohesion Policy between 2007 and 2013. EU funds are expected to provide additional support for the Polish economy, although the Government is taking necessary measures to prepare in advance for any adverse impact of the European economic slowdown and any resulting decrease in the flow of EU funds, which may have an adverse effect on public investments funded by the EU.

Inflow of EU funds into Poland since EU accession is presented below.

INFLOW OF EU FUNDS
	2004 (May - December)		2005		2006		2007		2008		2009		2010		2011
	(EUR millions)
Pre-accession Funds		483.0		672.2		222.3		0.9		34.7		0.0		0.0		0.0
Cohesion Policy		1,050.2		1,004.6		2,145.7		4,740.6		5,169.8		6,200.5		7,650.3		9,804.4
Common Agricultural Policy		297.4		1,542.1		1,937.4		2,770.4		2,031.2		2,913.9		3,515.8		4,326.3
Transition Facility		0.0		10.3		25.6		33.7		16.8		7.8		3.4		0.0
Cash Flow Facility Instrument		490.3		612.0		514.3		0.0		0.0		0.0		0.0		0.0
Schengen Facility		103.4		103.9		106.7		0.0		0.0		0.0		0.0		0.0
Other Funds		53.4		73.0		100.2		77.3		139.5		122.4		52.0		130.8
Migratory Funds		0.0		0.0		0.0		0.0		4.5		13.8		7.8		7.5
Total		2,477.6		4,018.1		5,052.2		7,622.9		7,396.4		9,258.4		11,229.3		14,269.0

__________

Source: Ministry of Finance

The following table sets forth information relating to the use of EU funds for the period between May 2004 and January 2012.

	(EUR millions)
Current expenditures	29,471.43
Capital expenditures	31,910.43
Total	61,381.86

__________

Source: Ministry of Finance

The following table sets forth certain information with respect to projected inflow of EU funds for the periods indicated. These are projections based on the current EU budget and do not reflect legal commitments on behalf of the EU to provide the funds. See “About this Prospectus” for further information with respect to forward-looking statements.

PROJECTED FUTURE INFLOWS OF EU FUNDS
	2012		2013		2014
	(PLN millions)
Common Agricultural Policy		19,441.02		19,804.50		19,791.00
Cohesion Policy		45,050.92		54,106.11		n/a

__________

Source: Ministry of Finance

The following table set forth certain information with respect to “Own Resources” payments to the EU for the periods indicated.

OWN RESOURCES PAYMENTS
	May-Dec 2004		2005		2006		2007		2008		2009		2010		2011
	(EUR millions)
Payments related to Gross National Income		890.5		1,561.7		1,661.8		1,723.1		2,120.2		2,215.3		2,487.3		2,641.5
Payments related to VAT		192.7		359.0		418.4		506.5		551.4		452.6		506.9		548.6
Traditional Own Resources Payments		111.9		268.8		274.8		335.0		437.5		314.8		309.9		363.9
Rebates and corrections		123.9		189.8		197.5		214.7		293.0		251.0		185.8		179.7
TOTAL		1,319.0		2,379.4		2,552.5		2,779.3		3,402.1		3,233.7		3,489.9		3,733.8

__________

Source: Ministry of Finance

Relationship with Multilateral Financial Institutions

Since 1990, Poland has received substantial financial and technical support from various multilateral financial institutions, including the World Bank, the EIB, the EBRD and the IMF. As at December 31, 2011, Poland’s liabilities to multilateral financial institutions amounted to EUR 11.5 billion and accounted for 20.8 percent of the State Treasury’s total external debt.

World Bank

The World Bank (IBRD) has provided significant financial support for Polish structural reforms as well as for the development of the Polish finance, infrastructure, health, environment and energy sectors. As at December 31, 2011, the World Bank had authorized a total of U.S.$ 11.3 billion in loans to Poland, approximately U.S.$ 10.1 billion of which had already been disbursed. Those amounts apply to loans guaranteed by the Polish State Treasury. Exposure to Poland as of April 25, 2012 amounted to U.S. $5.893 billion.

European Investment Bank

Poland signed its first framework agreement with the EIB in 1990 and became a full member of the EIB upon its accession to the EU in May 2004.

The main areas of EIB operations in Poland comprise the transport, power and energy, health, education and telecommunications sectors. In addition, the EIB provides commercially based loans to private enterprises and municipalities, as well as loans to financial intermediaries, in order to fund loans to small and medium sized enterprises.

As at December 31, 2011, the EIB had committed EUR 33.7 billion to Polish borrowers, of which EUR 24.2 billion had already been disbursed. As of December 31, 2011, EIB’s exposure to Polish borrowers amounted to EUR 20.0 billion.

European Bank for Reconstruction and Development

Since the beginning of its operations in Poland, the EBRD has committed over EUR 5.44 billion (as at December 31, 2011) in various sectors of the country’s economy (corporate, financial institutions, infrastructure, energy and energy efficiency) mobilizing over EUR 22.02 billion from other sources of financing, EUR 0.76 billion was granted to the public sector and EUR 4.68 billion was granted to the private sector.

International Monetary Fund

Poland is a member of the IMF’s Special Data Dissemination System and complies with applicable practices and standards in publicly disseminating economic and financial data. Currently, the IMF performs standard Article IV consultations with Poland on a 12-month cycle and makes unscheduled staff visits.

In 1999, Poland was invited to participate in a financial transactions plan with the IMF. Under this plan, Poland contributes to the funding of IMF investments, based on a quota that is determined by the IMF as the upper limit of Poland’s obligation to make resources available to the IMF for its financial transactions. In 2011, Poland’s quota share in the IMF increased to 0.71 percent from 0.63 percent in 2009 and is expected to increase to 0.86 percent once the amended Articles of Agreement come into force.

On January 21, 2011, the Executive Board of the IMF approved a two year credit line, subject to review after the first year, for Poland comprising 19.17 billion (approximately U.S.$ 30 billion) of special drawing rights (“SDRs”) under the IMF’s Flexible Credit Line (“FCL”). The FCL is designed to provide assistance to countries with sound economic fundamentals, policies and track records of policy implementation. Poland intends to treat the FCL as a standby measure and has not drawn on and is not currently planning to draw on the facility. This credit line supersedes two previous FCL arrangements made in July 2010 and May 2009. Prior to 2009, the most recent financial arrangement with the IMF was a 333.3 million SDRs stand-by arrangement which was approved in 1994 and fully repaid in 1995.

International Development Association

Since 1988, Poland has been a member and contributor to the IDA, which grants preferential long-term loans to the world’s poorest countries. As at December 31, 2011, Poland’s contribution to the IDA amounted to 33.52 million SDRs, of which 23.54 million SDRs have already been paid. Additionally, in 2006, Poland joined the Multilateral Debt Relief Initiative, committing to contribute the equivalent of PLN 33.18 million until 2043, of which five installments in the amount of PLN 2.33 million each have already been paid.

Nordic Investment Bank

Although Poland is not a member of the Nordic Investment Bank (“NIB”), it has access to NIB resources. As at December 31, 2011, loans granted to local governments and private sector entities in Poland by the NIB amounted to approximately EUR 522.6 million.

Council of Europe Development Bank

Poland has been a member of the CEB since 1998. As at December 31, 2011, the CEB had approved EUR 2,686.4 million in loans to Poland, of which EUR 1,757.2 million has been disbursed. The total value of loans extended to the Government of Poland in the form of signed projects as at December 31, 2011 amounted to approximately EUR 517.4 million, of which EUR 331.3 million has been disbursed. The CEB’s current exposure to the State Treasury of Poland amounts to EUR 179.6 million.

Major International Treaties

Since joining the EU, Poland’s trade policy has been in accordance with the rules of the EU Treaty. The EU has a customs union among EU member states and a common trade policy in relation to non-EU countries which involves, among other things, a common customs tariff, a common import and export regime and the undertaking of uniform trade liberalization measures as well as trade defense instruments. Poland is a party to all trade agreements concluded by the EU with other countries.

Some agreements to which Poland is party, concluded prior to entering the EU, remain in force, including the Trade and Navigation Treaty signed with Japan on November 16, 1978. Poland is also a party to 59 agreements regulating mutual investment support and protection and is party to tax treaties with approximately 80 countries.

The Accession Treaty, together with the Treaty on the European Union and the Treaty on the Functioning of the European Union, constitute the legal base regulating, inter alia, economic, trade, service, capital and human resource flows, investment support and protection.

THE ECONOMY

The Polish economy is the sixth largest economy in the EU and the twentieth largest in the world.¹ In 2010, Poland’s GDP per capita reached EUR 9,300 (Purchasing Power Standard (“PPS”) of 15,300, or 63 percent of the EU average). For the last 15 years, Poland has been one of the fastest growing economies in the EU. Between 1996 and 2010, GDP increased by 80 percent, growing on average by 4.4 percent annually. Owing largely to strong and diversified growth foundations, Poland also avoided contraction and GDP grew by 1.6 percent during the economic crisis in 2009, despite all other EU economies shrinking on average by 4.3 percent during the same period. In 2010, GDP grew by 3.9 percent and, in 2011, by 4.3 percent.

Economic Performance

The Polish economy has undergone significant changes since the fall of communism in 1989. In 1990, the first post-communist government introduced economic reforms that focused on reducing the size of the public sector, eliminating price controls and opening the economy to external competition. As a result, from its lowest point in 1991 until 2011 the GDP increased by nearly 140 percent.

A second milestone for the Polish economy was the accession to the EU. Even before the accession date (May 2004), Poland was already benefiting from virtually unrestricted access to the common market. Nevertheless, the value of exports to the EU had doubled by 2010, when compared with 2004. A more intangible aspect of EU entry was the improvement in the perception and trustworthiness of Poland among international investors. This helped to attract new foreign direct investment (“FDI”) inflows, which in the period 2004-2011 amounted to EUR 88.1 billion. Apart from market access and improved reputation among foreign investors, Poland has benefited greatly from the introduction of EU legislation and EU structural transfers. From May 2004 until the end of 2011, the transfers (net of EU contribution) amounted to EUR 38.3 billion. Roughly 60 percent of the transfers were structural and cohesion funds, used to fund infrastructure and human capital investments that support long-term growth.

The share of exports in GDP is at 42 percent in Poland, substantially lower than in neighboring Czech Republic (68 percent) or Slovakia (81 percent). 60 percent of Polish GDP is private consumption, while investments constitute another 20 percent. GDP structure, which is heavily based on domestic demand, along with supportive counter-cyclical government policy, were key factors that helped Poland to weather the 2009 economic storm with better results than other EU countries.

After a relatively mild slowdown, the GDP growth rate has stayed at roughly 4 percent on an annual basis in 2010 and 2011. This recovery was supported initially by external demand but later substituted by strong private and public investments in the run-up to the EURO 2012 football championship. Private consumption grew over the last two years by roughly 3 percent annually, due to increasing employment and higher wages, but also as a result of lower saving rates.

The following table sets out certain macroeconomic statistics for the five years ended 2011:

Economic Data	2007		2008		2009			2010			2011
	(PLN billion)
Nominal GDP		1,176.7		1,275.4		1,344.4			1,416.4			1,524.7
	(Real growth %)
GDP		6.8		5.1		1.6			3.9			4.3
Exports		9.1		7.1		(6.8	)		12.1			7.5
Imports		13.7		8.0		(12.4	)		13.9			5.8
Total domestic demand		8.7		5.6		(1.1	)		4.7			3.7
Private consumption		4.9		5.7		2.0			3.3			3.0
Public consumption		3.7		7.4		2.1			4.1			(1.3	)
Gross capital formation		24.3		4.0		(11.5	)		9.3			9.9
Real gross fixed capital formation		17.6		9.6		(1.2	)		(0.2	)		8.3
Value added		6.7		5.1		1.8			3.9			4.1
Industry		10.0		6.0		1.3			9.4			6.3
Construction		9.4		5.8		11.6			6.4			11.8
Trade; repair of motor vehicles		4.7		6.4		4.3			2.6			4.6

1 Source: World Development Indicators database, World Bank, December 15, 2011.

Economic Data	2007		2008		2009		2010		2011
	(Structure of GDP (GDP=100))
Industry		10.0		6.0		1.3		9.4		6.3
Construction		9.4		5.8		11.6		6.4		11.8
Trade; repair of motor vehicles		4.7		6.4		4.3		2.6		4.6

Economic Data	2007		2008		2009		2010		2011
	(Structure of GDP (GDP=100))
Exports		40.8		39.9		39.4		42.2		44.8
Imports		43.6		43.9		39.4		43.5		45.9
Private consumption		60.5		61.6		61.1		61.3		61.3
Public consumption		17.9		18.5		18.5		18.9		18.1
Gross capital formation		24.4		23.9		20.3		20.9		21.7
Real gross fixed capital formation		21.6		22.3		21.2		19.9		20.2

__________

Source: Central Statistical Office

The changes that the Polish economy has experienced since 1989 are also reflected in the different sectors that have shown growth, especially during the first 10 years of transition. For example, the agriculture sector has declined until stabilizing at 3 percent of total GDP. On the other hand, due to robust growth, nearly 50 percent of the value added is now created in the services sector. In terms of value added the most important sections are trade and transport services.

The following table illustrates the composition of GDP (as a percentage of total GDP) by sections for the periods indicated:

Sections	2007		2008		2009		2010
	(%)
Agriculture, forestry and fishing		3.7		3.2		3.2		3.3
Industry, of which		21.4		21.1		21.9		21.0
Mining and quarrying		2.0		2.1		1.9		2.0
Manufacturing		15.8		15.5		16.0		14.8
Electricity, gas, steam and air conditioning supply		2.6		2.5		2.9		3.1
Construction		6.5		6.7		7.2		7.3
Trade; repair of motor vehicles		16.0		16.0		16.7		17.1
Information and communication		3.5		3.6		3.6		3.2
Financial and insurance activities		4.7		4.6		3.5		3.8
Real estate activities		5.3		5.3		5.0		4.9
Public administration and defense; compulsory social security		4.5		4.7		4.9		4.7
Education		4.2		4.2		4.3		4.3
Human health and social work activities		3.2		3.3		3.3		3.4
Arts, entertainment and recreation		0.7		0.8		0.8		0.7
Activities of households as employees; undifferentiated goods-and services-producing activities of households for own use		0.5		0.5		0.5		0.5

__________

Source: Central Statistical Office

Eurozone Crisis

In January 2009, the Government approved the “Plan for Stability and Development 2009-2010”, or the 2009-2010 Plan, in an attempt to stabilize the financial system, ensure economic growth and address the 2008-2009 global financial crisis. The 2009-2010 Plan introduced guarantee programs for both deposits and interbank loans, established a Financial Stability Committee composed of the Minister of Finance as well as the presidents of the Polish Financial Services Authority (“PFSA”) and

the NBP, and provides for the exchange of information and the coordination of actions taken to maintain the stability of the Polish financial system. In addition, the NBP introduced a “trust package” designed to increase the Polish banking system’s liquidity. In an effort to promote economic growth, a tax rate reduction was introduced and steps were taken to facilitate investments co-financed with EU funds. In an effort to address the 2008-2009 global financial crisis, the limit on assurances and guarantees of the State Treasury available to financial institutions was raised to PLN 40 billion and a bill was passed allowing for the recapitalization of financial institutions by the State Treasury. In March 2009, Poland increased the capital of Poland’s state-owned Bank Gospodarstwa Krajowego (“BGK”) for purposes of providing new loans to small and medium-sized companies. The Government also established an additional initiative to stimulate the Polish economy, under which the Industrial Development Agency SA may provide support in connection with access to financing to medium and large enterprises in any sector, but with a particular emphasis on providing support to the defense sector.

In 2011, Poland’s economy remained relatively stable despite the recent eurozone turmoil. Poland’s GDP increased by 4.5 percent in the first quarter of 2011, 4.2 percent in the second as well as the third quarter of 2011 and 4.3 percent in the fourth quarter of 2011, in each case compared to the corresponding period in 2010. However, as the impact of the developments in the eurozone might become more severe in 2012, the government has revised its official macroeconomic forecasts and its budget for 2012. The revised forecast for GDP growth in 2012 is 2.5 percent, down from the 4.0 percent growth in GDP the government had forecast in September 2011. The budget for 2012 was signed by the President on March 7, 2012.

As international investors’ reactions to the events occurring in one country often may label an entire region or class of investment as disfavored by international investors, Poland could be adversely affected by negative economic or financial developments in other countries. Furthermore, general economic volatility on a global scale could trigger depreciation in the złoty. In 2010 and 2011, similar developments that adversely affected the złoty were countered on separate occasions by the intervention of the NBP to stabilize the exchange rate.

As larger economies, such as Italy and Spain, have appeared increasingly vulnerable to the eurozone sovereign debt crisis, growth in the countries comprising the eurozone has significantly decreased, including in Germany, Poland’s largest export partner. In addition, many EU countries are implementing austerity measures that may adversely impact growth in these countries. Given the strong economic and political ties between Poland and the rest of its EU trading partners, any material deterioration in the economy of an EU member state or any material deterioration in market conditions due to the uncertainties arising from problems in the EU, could have negative effects on Poland’s economy.

Aside from the direct impact of lower exports, another potential negative effect is the deleveraging of the European banking sector. Polish banks have managed to maintain good liquidity levels, equity coverage and a low rate of non-performing loans. Even though the parent companies of some Polish banks include foreign banks based in the countries that have been more severely affected by the recent eurozone sovereign debt crisis, currently there is no indication of liquidity problems affecting Polish banks. In addition, it is expected that the Polish banks’ high earnings for 2011 will be mostly retained in 2012, which is expected to further improve such banks’ liquidity and capital adequacy ratios.

Industry

Services

The services sector has, in recent years, been the fastest growing and largest sector in Poland. This sector accounted for 68.4 percent of GDP in 2010.

Oil and Gas

Poland’s oil reserves are insignificant. At the end of 2011, the documented reserves of crude oil were estimated at 25.78 million tons.

Russia is the main source of Poland’s crude oil imports, accounting for 91.85 percent of crude imports in 2011. Poland is currently developing a new transportation corridor for crude oil from the Caspian region, with the goal of strengthening the security of oil supplies to central and eastern European countries, including Poland, and increasing the efficiency of exporting oil from the Caspian region.

Poland has extractable natural gas resources of approximately 98.0 billion cubic meters. Total domestic consumption was approximately 14.7 billion cubic meters in 2011. Approximately 29 percent (4.4 bcm) of natural gas consumed in Poland in 2011 was obtained from domestic production. Gas is imported primarily from Russia (64 percent of total domestic consumption in 2011 – 9.5 bcm). These supplies were supplemented by imports from Germany and the Czech Republic. In mid-2010, construction started on a liquefied natural gas (“LNG”), terminal in Świnoujście. The infrastructure is expected to be ready in mid-2014 to regasify up to 5 billion cubic meters of natural gas. In June 2009, POGC signed a contract with Qatar gas according to which deliveries of approximately 1.5 billion cubic meters of natural gas (1 million tons of LNG) per year are expected to be made between 2014 and 2034.

Manufacturing

Manufacturing accounted for 14.8 percent of GDP in 2010. It further accounted for 17.6 percent of employed persons in 2010. Manufacturing consists primarily of the manufacture of food products and beverages, machinery, furniture, domestic appliance, TV sets, chemicals and chemical products, metals and refined petroleum products as well as motor vehicles.

The leading car manufacturers in Poland are currently FIAT, Volkswagen and General Motors. In 2010, approximately 785,000 passenger cars were produced in Poland as compared to approximately 819,000 in 2009. Poland is also a major manufacturer of parts and components for the motor industry.

Construction

Growth in the construction industry has come mostly from the private sector. From the beginning of 1997, there has been an increase in construction activity in large cities, with significant investment coming from foreign capital. Construction as a total percentage of GDP amounted to 7.2 percent of GDP in 2009 and 7.3 percent of GDP in 2010.

Infrastructure

Transport Infrastructure

As of December 31, 2010, PKP Polish Railway Lines Company managed 19,336 kilometers of railways. PKP is now being restructured in order to strengthen its market position and to privatize some of the group companies.

Poland had over 273,759 kilometers of hard-surfaced public roads in 2010. On January 25, 2011, the National Road Development Program for the years 2011 – 2015 was enacted by the Council of Ministers. The goal of the first stage of the new Program, which is scheduled for completion at the end of 2013, is 2040 kilometers of new and upgraded roads. By completion of the first stage, the Polish national road network will be connected to most of the key international road network. The new Program will be a subject to an update as soon as the EU Multiannual Financial Frameworks for 2014-2020 are set. On the basis of that information the scope and financial limits of the Program will be revised.

Polish seaports are key components of the national logistics chain. Presently, there are four ports of strategic economic significance in Poland: Gdańsk, Gdynia, Świnoujście and Szczecin. There are also approximately 20 smaller cargo and passenger ports.

Poland has 11 airports which handle international air traffic. Poland’s major airline, Polskie Linie Lotnicze LOT S.A. (“LOT”), is 67.97 percent owned by the State Treasury. LOT is a member of the international airline alliance Star Alliance.

Inflation

Following a period of high inflation in the early 1990s – a direct result of the structural changes in the Polish economy and price liberalization – the rate of inflation has steadily decreased. In September 1998, the Monetary Policy Council (“MPC”) adopted an inflation targeting strategy. For the period following 2003, the inflation target was set at 2.5 percent with permitted fluctuations of +/- 1 percentage point. This level remains the current target.

Since 2003, the average annual rate of consumer price index (“CPI”) in Poland has not exceeded 5 percent. Most recently, inflation in 2011 amounted to 4.3 percent and was mostly driven by a significant rise in energy and food prices on international markets, the weakening of the Polish złoty, and an increase in the value added tax (“VAT”) rates.

The following table shows the average annual rates of change in consumer prices for the years 2003-2011:

	2003		2004		2005		2006		2007		2008		2009		2010		2011
	(%)
CPI		0.8		3.5		2.1		1.0		2.5		4.2		3.5		2.6		4.3

__________

Source: Central Statistical Office

Although the CPI level was sometimes negatively affected by high commodity prices on the global market, the level of core inflation (CPI excluding food and energy) since 2003 remains subdued (the average annual rate exceeded 2.5 percent only twice: in 2002 (2.7%) and in 2009 (2.7%)).

Labor Market

In Poland in 2010, total average employment amounted to 14.1 million. One person out of five was employed in the industrial sector and nearly 16 percent in the trade and repairs sector. A substantial share of the workforce is still employed in the agriculture sector (17 percent).

The Polish labor market has undergone substantial changes during the last 10 years. In the years 2002-2004, as a result of structural reform, unemployment reached record high levels (close to 20 percent). In the years 2004-2009, the fast improving economic situation in Poland helped to reduce the unemployment level to 9.5 percent in 2006.

During the recent economic crisis, the Polish labor market performed relatively well. Although unemployment increased, job losses were concentrated mainly in the industrial sector and were offset by increasing employment in the service sector. In 2011, unemployment levels were still higher in comparison to pre-crisis levels.

The unemployment rate at the end of December 2011 was 12.5 percent. Young people (up to the age of 34) constitute 50 percent of the unemployed. Almost 30 percent of all unemployed are persons with primary education, incomplete primary or lower secondary education. 35 percent of the unemployed are without a job for more than one year.

Poland had a historically low participation rate: only 63.2 percent in 2007 (LFS data) in working age were active on the labor market. That mainly reflected relatively easy access to early retirement

schemes. Following the end of compulsory military service and a substantial tightening of the early retirement criteria in 2009, the participation rate (especially among women) has improved (to 66.1 percent in 2011). The Government is currently in the process of establishing the National Action Plan for Employment 2012-2014 in order to modernize the Polish labor market, which will be targeted, amongst others, to reduce the unemployment rate and increase the participation rate among young people.

The following table shows the unemployment rate in Poland since 2007:

	2007		2008		2009		2010		2011		March 2012
	(%)
Registered unemployment rate		11.2		9.5		12.1		12.4		12.5		13.3

__________

Source: Central Statistical Office

The following table shows the number of persons employed in Poland by major sections (including budgetary entities involved in the national defense and the public safety) at the end of years 2007 to 2010:

Sections	2007		2008		2009		2010	*
	(in thousands)
Agriculture, forestry and fishing		2,138		2,128		2,125	2,376
Industry		3,083		3,061		2,892	2,910
Construction		825		878		883	865
Trade; repair of motor vehicles		2,211		2,287		2,180	2,189
Transportation and storage		702		733		694	701
Accommodation and catering		239		275		253	237
Information and communication		212		233		240	238
Financial and insurance activities		330		348		334	338
Real estate activities		185		193		193	196
Professional, scientific and technical activities		463		473		480	481
Administrative and support service activities		372		374		376	412
Public administration and defense; compulsory social security		895		919		965	970
Education		1,052		1,058		1,072	1,080
Human health and social work activities		718		729		748	764
Arts, entertainment and recreation		142		146		146	148
Other service activities		204		202		204	201
Total Employed Persons		13,771		14,037		13,782	14,107

__________

Source: Central Statistical Office

* Data regarding employed persons in agriculture (and in the total economy) in 2010 are not strictly comparable to those for previous years (because data concerning employed persons on private farms in agriculture in 2010 were estimated on the basis of the results of the Agricultural Census 2010).

Poland’s ongoing competitiveness is largely due to relatively low labor costs and robust productivity gains. Average gross labor costs in Poland in 2010 amounted to PLN 4,386 per employee. At the same time, labor costs per one paid hour worked amounted to PLN 31.38. Among countries in Central and Eastern Europe (“CEE countries”), the highest hourly labor costs are Slovenia (EUR 14.87) and in the Czech Republic (EUR 9.59). In Poland (EUR 7.86) they are at the similar level as in such countries as Slovakia (EUR 8.07) or Hungary (EUR 7.01). The “costs of maintaining an employee” are the lowest in Bulgaria (EUR 2.95 in 2009). However the overall economic conditions of Bulgaria are not comparable to those of other countries in the region. Labor costs in CEE countries are on average approximately twenty euros lower than in Germany (EUR 28.9) or France (EUR 32.57).

The unit labor cost (Eurostat data) in 2011 grew by approximately 16 percent when compared with 2005 (67.8 percent in Romania, 52.5 percent in Bulgaria, 52.3 percent in Latvia, 40.9 percent in Estonia). For the last three years, the rate of unit labor cost growth in Poland has only slightly exceeded 2 percent annually.

BALANCE OF PAYMENTS AND FOREIGN TRADE

Balance of Payments

Poland’s current account has been in deficit since 1996. The trade deficit amounted to U.S.$ 26.5 billion in 2007, U.S.$ 35.0 billion in 2008, U.S.$ 17.2 billion in 2009, U.S.$ 21.9 billion in 2010 and U.S.$ 22.1 billion in 2011.

Measured by official balance of payments statistics, the trade deficit was U.S.$ 19.1 billion in 2007, U.S.$ 30.7 billion in 2008, U.S.$ 7.6 billion in 2009, U.S.$ 11.8 billion in 2010 and U.S.$ 14.1 billion in 2011. Poland’s exports of goods measured in U.S. dollars have grown from approximately U.S.$ 18.4 billion in 1994 to U.S.$ 193.9 billion in 2011.

In 2007 and 2008 the balance of trade deteriorated as a result of faster growth of imports than exports, mainly due to a stronger złoty and a rise in oil prices. In 2009, the balance of trade improved as imports decreased more quickly than exports. In 2010, as a result of faster growth of imports than exports, the situation reversed again and the balance of trade deteriorated. In 2011, imports growth was only slightly higher than exports.

In 2007, the value of exports increased by 23.7 percent and the value of imports increased by 31.7 percent. In 2008, the value of exports increased by 22.8 percent and the value of imports increased by 27.2 percent. In 2009, the value of exports decreased by 20.4 percent and the value of imports decreased by 28.4 percent. In 2010, the value of exports increased by 16.6 percent and the value of imports increased by 18.6 percent. In 2011, the value of exports increased by 17.0 percent and the value of imports increased by 17.2 percent.

FDI (as defined below) inflows have financed a substantial portion of the current account deficit. According to the NBP’s calculation methods, net FDI amounted to U.S.$ 18.0 billion in 2007. In 2008 and 2009, net FDI decreased and amounted to U.S.$ 10.4 billion and U.S.$ 8.5 billion, respectively. In 2010, net FDI decreased and amounted to U.S.$ 3.6 billion and in 2011 net FDI also increased and amounted to U.S.$ 9.1 billion. Net FDI financed 67.9 percent of the current account deficit in 2007, 29.7 percent in 2008, 49.3 percent in 2009, 16.3 percent in 2010 and 41.3 percent in 2011.

At the request of the Polish authorities, members of the Statistics Department of the IMF visited Poland in June 2011 to provide technical assistance in improving the country’s balance of payments statistics. The principal objective of the staff was to review work that the NBP and the Central Statistical Office recently completed that resulted in revisions to the external sector accounts released on June 29, 2011. The IMF staff also advised the NBP on areas of potential future investigations to improve the quality of its external sector statistics following a number of errors and omissions in the Polish balance of payments accounts in recent years. The IMF staff concluded that the revisions to the Polish data that were published on June 29, 2011 were based on appropriate compilation techniques.

The following table sets out Poland’s balance of payments and related statistics for the years indicated:

	2007			2008			2009			2010			2011	1
	(U.S.$ millions)
Current account		(26,501	)		(34,957	)		(17,155	)		(21,873	)	(22,128	)

Balance on Goods		(19,066	)		(30,659	)		(7,617	)		(11,810	)	(14,105	)
Goods: exports f.o.b.		145,337			178,427			142,085			165,709		193,899
Goods: imports f.o.b..		164,403			209,086			149,702			177,519		208,004

Balance on Services.		4,758			5,006			4,795			3,098		6,084
Services: Credit		28,914			35,549			28,986			32,718		37,037
Services: Debit		24,156			30,543			24,191			29,620		30,953

Balance on Income		(16,387	)		(12,882	)		(16,551	)		(16,923	)	(20,172	)
Income: Credit		10,140			11,126			6,625			7,275		8,221
Income: Debit		26,527			24,008			23,176			24,198		28,393

Balance on Current Transfers		4,194			3,578			2,218			3,762		6,065
Current transfers: Credit		10,397			11,172			10,349			9,936		12,358
Current transfers: Debit		6,203			7,594			8,131			6,174		6,293

Capital Account		4,771			6,115			7,040			8,620		11,126
		0			0			0			0		0
Capital account: Credit		5,410			7,089			7,438			9,216		11,782
Capital account: Debit		639			974			398			596		656

Financial Account		38,067			39,039			34,902			37,813		27,377

Direct investment abroad		(5,664	)		(4,613	)		(4,562	)		(5,530	)	(5,200	)
Direct investment in Poland		23,651			14,978			13,022			9,104		14,344

Portfolio investment assets		(6,340	)		2,358			(1,448	)		(1,094	)	660
Equity securities		(5,882	)		1,457			(1,862	)		(1,013	)	690
Debt securities		(458	)		901			414			(81	)	(30	)

Portfolio investment liabilities		113			(4,723	)		16,202			26,649		15,377
Equity securities		(470	)		564			1,579			7,875		2,873
Debt securities		583			(5,287	)		14,623			18,774		12,504

Other investment assets		(1,771	)		5,217			5,275			(4,114	)	(2,893	)
Monetary authorities		(225	)		(699	)		(1,023	)		28		1
Central and local government		(323	)		(116	)		(174	)		(244	)	(64	)
MFI (excluding Central Bank)		2,677			7,236			7,232			(1,865	)	(2,213	)
Other sectors		(3,900	)		(1,204	)		(760	)		(2,033	)	(617	)

Other investment liabilities		30,124			26,815			8,105			13,246		5,703
Monetary authorities		7,253			(6,178			2,898			1,709		(1,617	)
Central and local government		(1,429	)		(1,529	)		2,751			2,685		2,710
MFI (excluding Central Bank)		14,555			23,602			(471	)		5,588		(102	)
Other sectors		9,745			10,920			2,927			3,264		4,712

Financial derivatives		(2,046	)		(993	)		(1,692	)		(448	)	(614	)

Net errors and omissions		(3,300	)		(12,161	)		(10,045	)		(9,426	)	(10,092	)

Overall Balance		13037			(1,964	)		14,742			15,134		6,283

Official Reserve Assets		(13,037	)		1,964			(14,742	)		(15,134	)	(6,283	)

_______________

(1) Preliminary data.

Source: NBP

Foreign Direct Investment

FDI comprises the inflow of capital for the purchase of shares in direct investment enterprises, reinvested earnings and a balance of other capital transfers (mainly inter-company loans).

The inflow of FDI to Poland is based on data reported by companies and by banks. In 2011, the value of FDI inflow to Poland amounted to U.S.$ 14,344 million, up by U.S.$ 5,240 million (i.e., 57.6 percent), when compared with U.S.$ 9,104 million in 2010.

The following table sets out the inflow of FDI to Poland in the years 2007 to 2011:

	Components of FDI inflow
Year	Shares/ equity capital		Reinvested earnings			Other capital		Total
	(U.S.$ million)
2007		7,728		9,340			6,583		23,651
2008		9,873		(1,116	)		6,221		14,978
2009		5,282		5,011			2,729		13,022
2010		3,136		5,851			117		9,104
2011		809		5,079			8,456		14,344

_______________
Source: NBP

In 2011, other capital in direct investment, consisting of debt instruments such as intercompany loans and trade credits, as well as debt securities issued within the group of related enterprises (before 2010 included in portfolio investment), was the main component of FDI and amounted to U.S.$ 8,456 million, equaling 59.0 percent of total FDI. Reinvested earnings in direct investment enterprises amounted to U.S.$ 5,079 million, equaling 35.4 percent of total FDI. Capital for the purchase of shares amounted to U.S.$ 809 million, equaling 5.6 percent of total FDI and a decrease of 74.2 percent from U.S.$ 3,136 million in 2010. In 2010, reinvested earnings in direct investment enterprises were the main component of FDI and amounted to U.S.$ 5,851 million, equaling 64.3 percent of total FDI.

In 2011, 89.8 percent of FDI inflow was from EU countries, mainly Spain, Luxembourg, Sweden, France, Germany, Belgium and the Netherlands. The most significant investment from outside the EU came from residents of Switzerland and the United States.

Foreign Trade

Economic liberalization in Poland has led to a gradual opening up of the economy. Exports accounted for 40.8 percent of GDP in 2007, 39.9 percent in 2008 and 39.5 percent in 2009. According to preliminary data, exports made up 42.3 percent of GDP in 2010 and 44.7 percent in 2011. Imports constituted 43.7 percent of GDP in 2007, 43.9 percent in 2008, 39.4 percent in 2009, 43.5 percent in 2010 and, according to preliminary data, 46.0 percent in 2011.

Focus of Trade

As the economic transformation in Poland has progressed, the focus of trade has shifted from CEE countries towards the EU countries. In 2011, trade with EU countries accounted for 77.8 percent of exports and 59.2 percent of imports. Germany is Poland’s largest trading partner, accounting for 26.1 percent of exports and 22.3 percent of imports in 2011. Trade with other EU countries accounted for 51.7 percent of exports and 36.9 percent of imports.

The following table sets out, on a percentage basis, the geographic distribution of Poland’s exports and imports for the years indicated:

	2007				2008				2009				2010				2011*
	Export		Import		Export		Import		Export		Import		Export		Import		Export		Import
Developed Countries:
Germany		25.9		24.1		25.0		23.0		26.2		22.4		26.1		21.9		26.1		22.3
Other EU countries		53.0		40.1		52.8		38.9		53.4		39.5		53.0		37.6		51.7		36.9
Other developed countries		5.2		6.9		5.2		7.4		6.0		7.2		5.8		7.7		6.3		7.1
Total developed countries		84.1		71.1		83.0		69.3		85.6		69.1		84.9		67.2		84.1		66.3
Central and Eastern Europe:
CEFTA(1)		0.8		0.3		0.8		0.2		0.7		0.2		0.7		0.2		0.6		0.2
Russian		4.6		8.7		5.2		9.7		3.7		8.5		4.2		10.2		4.5		12.2
Federation:
Other Central and Eastern Europe(2)		4.4		1.6		4.3		1.7		3.1		1.2		3.1		1.4		3.3		1.9
Total Central and Eastern Europe		9.8		10.6		10.3		11.6		7.5		10.0		8.0		11.8		8.4		14.3
Developing countries		6.1		18.3		6.7		19.1		6.9		20.9		7.1		21.0		7.5		19.4
Total		100.0		100.0		100.0		100.0		100.0		100.0		100.0		100.0		100.0		100.0

_____________

Notes:

(*)	Preliminary data.

(1)	In 2006, CEFTA consisted of Bulgaria, Romania, Croatia and Macedonia. As of May 1, 2007, CEFTA comprises: Albania, Bosnia and Herzegovina, Croatia, the former Yugoslavia Republic of Macedonia, the Republic of Moldova, Montenegro, Serbia and Kosovo.

(2)	“Other central and eastern Europe” includes European countries of the former USSR.

Source: Central Statistical Office

Composition of Trade

Poland’s external trade is dominated by intra-industry trade (exports and imports of commodities in the same industry or production group in a given time). The most significant export items in 2011 were machinery and transport equipment (for example, cars, vehicles, ships, boats, parts and accessories to motor vehicles), manufactured goods and miscellaneous manufactured articles (for example, other consumer goods). The most significant imported items are similar to those which dominate exports, with chemicals and related products playing a relatively more important role than that of exports. Imports consist mostly of manufactured goods.

The following table sets out the composition of Poland’s exports (based on customs data and the Standard International Trade Classification) for the years indicated:

	2007				2008				2009				2010				2011(*)
	(U.S.$ millions)		(%)		(U.S.$ millions)		(%)		(U.S.$ millions)		(%)		(U.S.$ millions)		(%)		(U.S.$ millions)		(%)
Natural Resource-Based Goods:
Food and Live Animals		11,677		8.4		14,541		8.5		13,065		9.6		14,744		9.2		17,488		9.3
Beverages and Tobacco		1,158		0.8		1,577		0.9		1,962		1.4		2,101		1.3		2,382		1.3
Non-Food Raw Materials (excluding fuel)		3,201		2.3		3,847		2.2		2,577		1.9		3,706		2.3		4,444		2.3
Mineral Fuels, Lubricants and Related Materials		5,275		3.8		7,306		4.2		4,214		3.1		6,536		4.1		9,223		4.9
Animal and Vegetable Oils		277		0.2		363		0.2		285		0.2		324		0.2		374		0.2
Subtotal		21,588		15.5		27,634		16.0		22,103		16.2		27,411		17.1		33,911		18.0
Manufactured Goods:
Chemicals and Related Products		4		7.3		13,513		7.9		10,706		7.8		13,634		8.5		16,850		8.9
Manufactured Goods Classified Chiefly by Material		32,136		23.2		37,540		21. 8		26,674		19.5		32,362		20.3		40,134		21.2
Machinery and Transport Equipment.		56,774		40.9		71,085		41.4		59,033		43.2		65,687		41.1		73,760		39.0
Miscellaneous:
Manufactured Articles		18,030		13.0		21,970		12.8		18,037		13.2		20,558		12.9		24,008		12.7
Non-Classified		63		0.1		118		0.1		88		0.1		106		0.1		285		0.2
Subtotal		117,197		84.5		144,226		84.0		114,538		83.8		132,347		82.9		155,037		82.0
Total		138,785		100.0		171,860		100.0		136,641		100.0		159,758		100.0		188,948		100.0

______________________

(*)	Preliminary data.

Source: Yearbook of Foreign Trade Statistics, Central Statistical Office

The following table sets out the composition of Poland’s imports (based on customs data and the Standard International Trade Classification) for the years indicated:

	2007				2008				2009				2010				2011*
	(U.S.$ millions)		(%)		(U.S.$ millions)		(%)		(U.S.$ millions)		(%)		(U.S.$ millions)		(%)		(U.S.$ millions)		(%)
Natural Resource-Based Goods:
Food and Live Animals		8,688		5.3		11,882		5.7		10,301		6.9		11,641		6.5		13,656		6.5
Beverages and Tobacco		949		0.6		1,090		0.5		948		0.7		1,108		0.6		1,248		0.6
Non-Food Raw Materials (excluding fuel)		4,910		3.0		6,462		3.1		4,086		2.7		5,414		3.0		7,210		3.4
Mineral Fuels, Lubricants and Related Materials		16,352		9.9		23,881		11.2		14,105		9.4		19,020		10.7		26,690		12.8
Animal and Vegetable Oils		493		0.3		782		0.4		499		0.3		571		0.3		915		0.4
Subtotal		31,392		19.1		44,097		20.9		29,939		20.0		37,754		21.1		49,719		23.7
Manufactured Goods:
Chemicals and Related Products		21,290		13.0		27,464		13.0		20,960		14.0		25,386		14.3		29,778		14.2
Manufactured Goods Classified Chiefly by Material		34,709		21.2		39,577		18.7		26,043		17.4		31,722		17.8		37,998		18.2
Machinery and Transport Equipment		58,445		35.6		74,493		35.5		53,170		35.6		61,103		34.3		66,225		31.6
Miscellaneous		14,131		8.6		19,129		9.1		15,917		10.6		18,253		10.3		20,468		9.8

Manufactured Articles Non-Classified	4,205	2.5	5,719	2.8	3,541	2.4	3,845	2.2	5,210	2.5
Subtotal	132,780	80.9	166,382	79.1	119,631	80.0	140,309	78.9	159,679	76.3
Total	164,172	100.0	210,479	100.0	149,570	100.0	178,063	100.0	209,398	100.0

___________

(*) Preliminary data.

Source: Yearbook of Foreign Trade Statistics, Central Statistical Office

Trade Policy

In both 2010 and 2011, the average effective rate of tariffs imposed by Poland on imports was 0.77 percent. Tariffs are scheduled to decrease further over the next several years as a result of multilateral agreements with the EU and EFTA, as well as pursuant to Poland’s membership in the WTO. On January 1, 2002, all remaining customs barriers for industrial exports from EU member states to Poland were lifted. Since accession to the EU on May 1, 2004, Poland has applied the EU’s trade policy.

Official Reserves

By the end of 2007, Poland’s official reserves amounted to U.S.$ 65.7 billion. Reserves decreased to U.S.$ 62.2 billion by the end of 2008 and increased in 2009 to U.S.$ 79.6 billion. At the end of December 2010 and 2011, reserves increased and amounted to U.S.$ 93.5 billion and U.S.$ 97.9 billion, respectively.

The following table sets out certain information in U.S. dollar equivalents regarding Poland’s official reserve assets at the end of the years indicated.

	Official Reserve Assets(1) Excluding Monetary Gold		Official Reserve Assets of Monetary Gold		Total Official Reserve Assets		Months of Import Coverage(2) in Total Official Reserves Assets
	(U.S.$ millions)		(U.S.$ millions)		(U.S.$ millions)
2007		62,978.1		2,767.4		65,745.5		4.5
2008		59,318.0		2,862.1		62,180.1		3.7
2009		75,938.4		3,652.9		79,591.3		6.2
2010		88,848.0		4,666.4		93,514.4		6.4
2011		92,656.1		5,209.9		97,866.0		5.6

____________

(1)	Including Poland’s reserve position in IMF.

(2)	Based on average imports of goods.

Source: NBP

Foreign Exchange Regulations

In June 1995, Poland liberalized its current account according to Article VIII of the IMF Articles of Agreement. Some restrictions still exist on direct investment in non-OECD countries and countries with which Poland did not conclude agreements on the bilateral protection of investments and on real estate, acquisitions and short-term capital movement transactions (as listed in the OECD Code of Liberalisation of Capital Movements).

The złoty is fully convertible in all types of current account transactions and foreign investors are able to purchase foreign currencies with złoty for the transfer of profits and repatriation of capital without the requirement of a special foreign exchange permit. A number of other foreign exchange transactions are generally permitted to be undertaken without obtaining authorization from the NBP.

Further liberalization of foreign exchange transactions with EU and OECD countries followed after the adoption of the Foreign Exchange Law in 2002 whereby nearly all prior restrictions were abolished.

Exchange Rate Policy

For several years prior to April 2000, Poland used a crawling peg with a fluctuating band system according to which a central exchange rate was established against a basket of currencies and was devalued at a fixed rate. Since April 2000, the złoty has generally been floating freely. However, the

floating exchange rate regime does not rule out foreign exchange interventions should they turn out necessary to ensure domestic macroeconomic and financial stability, which is conducive to meeting the inflation target in the medium term. One such intervention took place in April 2010 and five such interventions occurred between September and December 2011.

The following table sets out the official NBP exchange rate between the złoty and the U.S. dollar for the periods indicated:

	Year ended December 31,										March 31,
	2007		2008		2009		2010		2011		2012
End of period		2.4350		2.9618		2.8503		2.9641		3.4174		3.1191
Average		2.7667		2.4092		3.1162		3.0157		2.9634		3.1320

____________

Source: NBP

The following table sets out the official NBP exchange rate between the złoty and the euro for the periods indicated:

	Year ended December 31,										March 31,
	2007		2008		2009		2010		2011		2012
End of period		3.5820		4.1724		4.1082		3.9603		4.4168		4.1616
Average		3.7829		3.5166		4.3273		3.9946		4.1198		4.1370

____________

Source: NBP

MONETARY AND FINANCIAL SYSTEM

Structure and Development of the Polish Banking System

Until 1989, the Polish banking system was controlled by the State with business decisions subordinated to political priorities. The reform of the Polish banking system began in 1989 when the Parliament adopted the Banking Law of August 29, 1997 (the “Banking Law”) and The Act on the National Bank of Poland of August 29, 1997 (the “NBP Act”). As a result of these changes in legislation and administrative procedures, a relatively large number of new private banks were established, which later underwent a process of consolidation.

In February 2012, there were 47 domestic commercial banks in Poland, of which ten were banks with majority Polish ownership and 37 were banks with majority foreign ownership. As at the end of February 2012, 63.8 percent of the banking sector’s assets were held by foreign controlled banks (including branches of credit institutions). There were also 573 co-operative banks and 19 branches of credit institutions operating in Poland. Moreover, five domestic banks performed services abroad either through a subsidiary or a branch.

The Polish banking sector is stable and well capitalized. Polish banks’ capacity to absorb losses rose as a result of capital increases through share issuances and the retention of profits generated in the years 2008 to 2011. The capital adequacy ratio increased from 11.1 percent in December 2008 to 13.4 percent in February 2012. Since the onset of the financial crisis in 2008, no Polish bank has required the use of public support for capital increase. Moreover, the results of macroeconomic stress tests conducted by the National Bank of Poland have shown that the overall standing of the banking sector is good without posing systemic risk.

As the banking sector in Poland performs mostly commercial banking activities and has not been extensively involved in investment banking or product structuring linked to subprime debt, it has been affected by the global financial crisis mainly through deterioration of loan portfolio quality. However, the growth rate of non-performing loans and impairment losses has already stabilized and allowed the banking sectors’ financial results to reach levels exceeding those reported in 2008. As a consequence, net income of the domestic banking sector for 2011 was about 16 percent higher than in 2008 and reached a historical high in nominal terms. In 2010 and 2011, loans to the non-financial sector continued to increase, especially PLN denominated housing loans, although at a lower pace than before the onset of the financial crisis in 2008. The annual growth of PLN-denominated housing loans reached 29.5 percent at the end of 2010 and 21.6 percent as of February 2012. At the same time, banks limited the supply of consumer loans and foreign exchange housing loans, both due to elevated risk-aversion and recommendations issued by the Polish Financial Supervision Authority. In the case of consumer loans, the rate of growth turned negative in 2011 and reached -3.4 percent as of February 2012, down from a level of approximately 30 percent observed in the years 2006-2008 (all data excludes the impact of foreign exchange rate changes). Foreign exchange housing loans portfolio increased in turn by a mere 2.1 percent in February 2012, significantly below the peak of 72.6 percent in May 2006. As a consequence, the currency composition of newly extended housing loans changed in comparison with 2008. As of February 2012, PLN denominated loans accounted for over 75 percent of the reported new loans and the euro has replaced Swiss francs as the main foreign currency with a share of 18 percent of newly extended housing loans. After a period of negative annual growth starting in 2009, the portfolio of loans to enterprises has been growing since March 2011. The growth rate reached 14.1 percent as of February 2012, with investment loans increasing by 24.5 percent and current loans by 13.0 percent. The pace of growth is still below the levels reported in 2008, mainly due to a lower credit demand from the enterprise sector.

The National Bank of Poland

The NBP is the central bank of Poland. The primary legislation governing the NBP includes EU Law, the Constitution of the Republic of Poland, the NBP Act and the Banking Law, both of which are consistent with EU standards. The NBP has three decision-making bodies: the President, the Management Board (consisting of the President and six to eight Members, including two Deputy Presidents) and the Monetary Policy Council (“MPC”). Monetary policy decisions are taken by the MPC. The President of the NBP is appointed for a six year term by the Sejm, after nomination by the President of the Republic of Poland, with strictly limited rights of removal. Following the death of Sławomir Skrzypek, the President of the NBP appointed in January 2007, in a plane crash on April 10, 2010, First Deputy President Piotr Wiesiołek served as the interim President of the NBP until Marek Belka was awarded this function by Bronislaw Komorowski, interim President of the Republic of Poland at this time. The current President of the NBP, Marek Belka, was officially appointed by the Sejm on June 10, 2010 and took office on June 11, 2011.

EU Law, the Constitution of Poland and The NBP Act confirm the NBP’s independence, which is essential for the credibility of the central bank and a prerequisite for Poland’s future participation in the EMU. According to the Constitution, the NBP has the exclusive right to issue money as well as to formulate and implement monetary policy. The NBP provides banking services to the central Government and to other banks in the banking system. Although the NBP may act as a financial agent to the Government, it is not regarded as liable for the obligations of the State Treasury in this respect. The NBP is also responsible for establishing necessary conditions for the development of the banking system. Following an amendment to the NBP Act in 2008, the NBP has been assigned the task to ensure the stability of the domestic financial system.

According to the Constitution and the NBP Act, the role of the MPC is to draw up annual monetary policy guidelines and submit these to the Sejm together with the draft budget submitted by the Council of Ministers. The MPC determines monetary policy guidelines for each year and, on the basis of those guidelines, makes decisions concerning the use of the NBP’s key policy instruments, namely interest rates, required reserve ratios, open market operations, NBP loan and credit facilities and the exchange rate policy. The MPC assesses the activity of the NBP Management Board with regard to its implementation of monetary policy guidelines. It is also required to present a report to the Sejm on the performance of the monetary policy within five months of the end of each fiscal year.

Under the NBP Act, the powers of the President of the NBP are separated from those of the MPC and the Management Board. The MPC consists of ten members, namely the President of the NBP as Chairman, and nine other members from outside the NBP. Members are appointed for terms of six years. The tenure of all of the current members began in 2010. Three members of the MPC are appointed by the Sejm, three by the Senate and three by the President of Poland. The MPC meets at least once a month. It makes decisions by a majority vote and requires a quorum of at least five members, including the Chairman. In the event of a tied vote, the Chairman has the deciding vote. The positions taken by MPC members during votes are published in official publications announced in the Court and Commercial Gazette (Monitor Sądowy i Gospodarczy) after a period of six weeks, but not later than three months from the date of adopting the resolution.

The NBP carries out the foreign exchange policy established by the Council of Ministers in agreement with the MPC. The exchange rate policy is laid down by the Council of Ministers in consultation with the MPC. The NBP publishes current exchange rates for foreign currencies and rates for other types of foreign exchange and performs its function of central foreign exchange authority by holding and managing the official foreign exchange reserves, and by conducting banking operations and taking other measures to ensure the safety of foreign exchange operations and international payments liquidity.

In line with the NBP Board’s mandate regarding financial stability set forth in the NBP Act, the NBP produces a semi-annual Financial Stability Report, which analyzes the resilience of the domestic financial system, in particular the banking sector, against potential or materialized financial and

macroeconomic shocks. The reports take into account a wide range of financial and macroeconomic indicators which are largely based on data received directly from financial institutions and supported with the NBP’s own quantitative and qualitative research.

Monetary Policy

The primary objective of the NBP’s monetary policy is to maintain price stability (i.e., low and stable inflation), which is conducive to balanced economic growth over the long term. In order to achieve this, the NBP’s strategy is based on inflation targeting accomplished under a floating exchange rate regime. Within such a regime, the MPC sets a numerical medium-term target for inflation and meets regularly each month to discuss the economic situation and outlook, and, after analysing the risks to price stability, adjusts the monetary policy stance accordingly. The NBP’s main instrument is a short-term interest rate.

The medium-term inflation target, laid out in the Monetary Policy Strategy adopted by the MPC in February 2003, is set at 2.5 percent with a symmetrical band for deviations of +/-1 percentage point. The target is defined over a medium-term horizon and in terms of annual growth of CPI. Every year the MPC also publishes Monetary Policy Guidelines, providing an outline for the monetary policy in the coming year. This outline is fully compatible with the medium-term strategy.

Since the introduction of the medium-term target of 2.5 percent, the average CPI inflation in Poland has amounted to 3.0 percent. In 2011, CPI inflation was running above the target (4.3 percent), which was mainly due to the sharp rise in global commodity prices in the first half of 2011. Moreover, the złoty depreciation in the second half of 2011 further negatively influenced inflation. Although the złoty has generally been floating freely since April 2000, the floating exchange rate regime does not rule out foreign exchange interventions should they turn out necessary to ensure domestic macroeconomic and financial stability, which is conducive to meeting the inflation target in the medium term. One such intervention took place in April 2010 and five such interventions occurred between September and December 2011.

Money Supply

In December 2011, the annual rate of growth of broad money supply was 12.5 percent in nominal terms, or 7.5 percent in real terms. Starting from the beginning of the second quarter of the 2007 reporting period, the methodology of compiling certain monetary supply aggregates has been changed. The changes included, amongst others, a modification of the definitions of broad and narrow money aggregates, M3 and Ml, respectively. For the purposes of comparability historical data have been adjusted accordingly.

The following table sets out data on monetary aggregates for the periods indicated:

	Year ended 31 December
	2007		2008		2009		2010		2011
	(PLN millions)
Cash in circulation		77,160.0		90,812.3		89,777.6		92,707.0		101,846.6
Demand deposits		258,106.2		259,130.9		298,567.2		356,485.0		366,128.5
Narrow Money (M1)		335,266.2		349,943.1		388,344.9		449,192.0		467,975.1
Time deposits		214,027.5		310,285.2		326,391.1		325,449.2		395,780.4
Deposits redeemable at notice up to three months:		50.6		11.6		21.9		16.8		13.4
Repurchase agreements		8,192.4		3,468.2		3,093.7		6,437.7		9,575.7
Debt securities with maturity below two years		3,757.7		1,797.5		1,843.0		2,050.0		7,850.3
Broad Money (M3)		561,623.8		666,231.3		720,232.5		783,648.5		881,502.8
Annual Changes (%)
Broad Money (nominal)		13.4		18.6		8.1		8.8		12.5
Broad Money (CPI deflated)		9.0		14.8		4.4		5.5		7.5

______________

Source: NBP

Polish monetary statistics are maintained in accordance with the requirements of the European Central Bank (“ECB”) and as such, they are directly comparable to the statistics provided by other states applying the same methodology.

Monetary Policy Implementation

The NBP’s interest rates are the principal instrument of monetary policy with regard to reaching predetermined inflation targets in Poland. By setting the level of these rates, the Monetary Policy Council influences the short-term money market interest rates.

The NBP’s reference rate reflects the general direction of monetary policy. It determines the yield obtainable on open market operations. Due to liquidity surplus prevailing in the Polish banking sector, open market operations are used to absorb excess liquidity from the interbank market. Starting from 2008, the open market operations are conducted on such a scale as to enable the Polish Overnight Index Average (POLONIA) to settle close to the NBP reference rate.

The NBP’s open market operations can be divided into the following three categories:

Main open market operations which are executed on a regular weekly basis in the form of NBP bills issued with a seven-day maturity. A fixed rate at the level of the NBP’s reference rate is binding during tenders. Regular issuance of NBP bills plays a pivotal role in pursuing the objectives of the NBP’s open market operations,

Fine-tuning open market operations that might be conducted with the aim for limiting the volatility of short-term market interest rates. They may involve liquidity-absorbing operations (issuance of NBP bills, reverse repo transactions) or liquidity-providing ones (redemption of NBP bills before maturity, repo transactions). The maturity and yield of these operations as well as the exact manner in which they are carried out depend on the situation in the banking sector, and

·	Structural open market operations which might be conducted in order to affect long-term liquidity structure in the banking sector. If required, the central bank may carry out the following structural operations: bond issue, purchase or sale of securities on the secondary market.

During the financial crisis, there were occasional significant declines in the POLONIA rate below the NBP’s reference rate, reflecting accumulation of banks’ liquidity buffers during required reserve maintenance periods. In order to prevent such unexpected movements of the POLONIA rate, in December 2010 the central bank started conducting short-term operations to absorb liquidity in an attempt to offset the mentioned changes in the liquidity conditions that temporarily took place. These fine-tuning operations are ongoing and have contributed to the lower spread between the POLONIA rate and the NBP’s reference rate, in comparison with the data representing the years 2009 to 2010.

The NBP’s deposit and Lombard rates determine the corridor for overnight interest rate fluctuations in the interbank market. A standing deposit facility enables banks to deposit their liquidity surpluses with the central banks on an overnight basis. The interest on the facility constitutes the lower limit for the interbank market rate quoted for this period. A standing credit facility (Lombard credit) enables banks to obtain credit from the central bank on an overnight basis. Lombard credit is collateralized with securities accepted by the central bank. The interest on this loan expresses the marginal cost of obtaining funds from the central bank, which constitutes the upper limit for the interbank overnight rate.

The system of required reserves contributes to the stability of the shortest-term market interest rates in the reserve maintenance periods. The fact that banks are required to maintain reserve holdings under this arrangement facilitates interbank settlements, as they always have the necessary funds at their disposal. At the same time, the average reserve requirement system that allows banks to determine the amount of funds held on current account with the central bank over the maintenance period limits volatility of short-term interbank interest rates.

The terms and conditions of the reserve requirements system are uniform for all banks. The reserves ratios applied by the NBP are:

●	0 percent for repo operations and sell-buy-back operations; and

●	3.5 percent for other liabilities included in the reserve base.

Banks are obliged to maintain an average balance of funds on accounts with the NBP during the reserve period at a level not lower than the required reserves. Since May 2004, the holdings of minimum reserves have been remunerated (0.9 percent of the NBP’s rediscount rate).

The following table sets out details of interest rates set by the NBP and changes made to them since 2007:

	Lombard Rate		Reference Rate		Deposit Rate
	(%)
Effective Date
April 26, 2007		5.75		4.25		2.75
June 28, 2007		6.00		4.50		3.00
August 30, 2007		6.25		4.75		3.25
November 29, 2007		6.50		5.00		3.50
January 31, 2008		6.75		5.25		3.75
February 28, 2008		7.00		5.50		4.00
March 27, 2008		7.25		5.75		4.25
June 26, 2008		7.50		6.00		4.50
November 27, 2008		7.25		5.75		4.25
December 24, 2008		6.50		5.00		3.50
January 28, 2009		5.75		4.25		2.75
February 26, 2009		5.50		4.00		2.50
March 26, 2009		5.25		3.75		2.25
June 25, 2009		5.00		3.50		2.00
January 20, 2011		5.25		3.75		2.25
April 6, 2011		5.50		4.00		2.50
May 12, 2011		5.75		4.25		2.75
June 9, 2011		6.00		4.50		3.00
May10, 2012		6.25		4.75		3.25

____________

Source: NBP

Bank Regulation

With effect from January 1, 2008, banking supervision has been carried out by the Polish Financial Supervision Authority (the “PFSA”) as stipulated in the Act of July 21, 2006 on the Supervision of the Financial Market (the “Financial Market Supervision Act”). The PFSA started its operations on September 19, 2006 and was formed from the former Polish Securities and Exchange Commission and the Insurance and Pensions Funds Supervisory Commission.

According to Article 4 paragraph 1 of the Financial Market Supervision Act, the PFSA’s responsibilities comprise the following:

●	exercising supervision of the financial market;

●	taking action to foster the proper operation of the financial market;

●	taking action to promote the development of the financial market and its competitiveness;

●	taking educational and informative actions related to the operation of the financial market;

●	participating in the preparation of legal acts relating to financial market supervision;

●

creating opportunities for the amicable and conciliatory dissolution of disputes between the participants of the financial market, including, in particular, disputes arising from contractual relationships between the entities subject to the PFSA’s supervision and the customers buying their services; and

●	other statutory tasks.

According to the Banking Act, the activities of banks, branches and representative offices of foreign banks, as well as of branches and representative offices of credit institutions, shall be subject to supervision of the PFSA. The scope and principles of such supervision are set out in the Banking Act and the Financial Market Supervision Act. For example, the PFSA may, in certain circumstances specified in the Banking Law, repeal an authorization to create a bank, liquidate a bank or order the suspension of a bank’s operations and petition a court of appropriate jurisdiction for a declaration of bankruptcy.

The Polish bank regulatory framework also includes the Bank Guarantee Fund (the “BGF”) whose main responsibilities include:

●	to reimburse, up to the amount specified by the Act on the BGF of December 14, 1994 (Journal of Laws no. 711 item 84 of 2009), deposits in the event of the bankruptcy of a bank which is a participant in the deposit guarantee scheme;

●	to provide financial assistance to banks facing insolvency;

●	to support restructuring processes including the mergers of endangered banks with other banks; and

●	to collect and analyze information about entities covered by the guarantee system, including the preparation of the working papers concerning the banking sector condition.

Since December 2010, the guaranteed amount for bank deposits covered by the BGF has been EUR 100,000 in PLN and other currencies per person or legal entity (excluding State Treasury and financial institutions) held by a single bank (both commercial or cooperative). The Act on the Bank Guarantee Fund does not currently provide any guarantee for deposits managed by credit unions (i.e., SKOKs) as such institutions are not legally obliged to participate in the BGF guarantee scheme.

On February 12, 2009, the Polish Parliament passed the Financial Support Act which provides that the Minister of Finance, representing the State Treasury, at the request of a financial institution and after consultation with the Chairman of the PFSA and the President of the NBP (as well as the BGF in the case of banks), will be able to provide financial institutions established in Poland with support in a crisis, allowing these institutions to maintain their financial liquidity.

The law provides that the aid granted may take the following forms:

●	Treasury guarantees on repayment of refinancing loans extended by the NBP to banks (up to 50 percent of the sum to be repaid);

●	Treasury guarantees on repayment of loans and credit lines extended by credit institutions;

●	Treasury guarantees on debt securities issued by credit institutions (securities with a maturity from 3 months to 5 years);

●	sale of Treasury securities to financial institutions with delayed payment or with payment in installments or directed to a particular financial institution; and

●	lending of Treasury securities to financial institutions.

Additionally, in early 2010 the Polish Parliament passed a law which provides a legal basis for recapitalization measures directed at troubled financial institutions. The support may take the following forms:

●	state recapitalization guarantee which can result in the State Treasury acquiring shares, bonds or other debt instruments issued by an ailing institution, and/or

●	takeover of a financial institution/nationalization if the institution faces insolvency problems that can influence the stability of the financial market in the country.

The Minister of Finance ultimately decides whether to provide support and under which conditions, after consultation with the President of the NBP and the Chairman of the PFSA (and also with the BGF when banks are concerned).

Both of the above mentioned laws currently have no expiry date. However, the measures should be available for financial institutions until a decision of the European Commission is in place regarding the compliance of the support with the single market guidelines. No eligible institutions has applied for the measures so far.

Capital Markets

Warsaw Stock Exchange

In 1991, Poland established the Warsaw Stock Exchange (the “WSE”). The WSE operates the main market and also acts as an operator of the alternative market called NewConnect (established in August 2007) for smaller companies. In November 2010, the WSE went public and its shares were listed in Warsaw.

In September 2009, the WSE launched CATALYST, the first organized market in debt securities in Poland and a unique market of its kind in Central and Eastern Europe. The system facilitates and optimizes corporate and municipal bond issuances. BondSpot SA, a subsidiary of the WSE, also operates the Treasury BondSpot Poland, which is a wholesale market dedicated to trading in Treasury bonds and Treasury bills.

Securities legislation regulates the public offering of securities and the operations of securities brokers. The PFSA has enforcement powers and supervises the financial markets, including the securities and commodities markets. See “Bank Regulation” above. Since July 2005, trading of securities has been regulated by three acts: the Act on public offering, conditions governing the introduction of financial instruments to organized trading and public companies of July 29, 2005, the Act on trading in financial instruments of July 29, 2005 and the Act on capital market supervision of July 29, 2005. Since January 1998, with the launch of futures contracts based on the WIG20, the WSE blue chip index, the WSE also operates a derivatives market. In January 2001, the first equity futures contracts were introduced. In September 2003, trading in options based on the WIG20 was launched on the WSE. In 2010, the WSE enabled short selling under new rules and listed the first Exchange Traded Fund.

Settlement in Poland is conducted on a delivery-versus-payment basis. Each investor is required to hold a securities account and a cash account with a local broker or custodian. Each broker and custodian is required to hold a securities account in the National Depository for Securities and maintain a cash account with a clearing bank. The system is fully computerized. All securities admitted for trading on the WSE markets are registered in book-entry form only. Shareholders are supplied with deposit certificates and account statements by the broker or custodian with whom they hold an account.

In March 2012, there were 61 members of the WSE (31 local members and 30 foreign members) and out of a total of 66 investment firms conducting their activities under Polish law, in November 2011, 14 were banks conducting brokerage activities and 52 were independent entities. In March 2012, there

were 2,495 licensed brokers of securities, 234 commodities brokers and 382 licensed investment advisors.

Foreign investors may trade on the WSE on the same terms as domestic investors and may freely repatriate trading profits in a foreign currency.

The following table sets forth selected indicators relating to the equity component of the WSE as at the end of the periods indicated:

	As at December 31,								As at March 31,
	2008		2009		2010		2011		2012
Market capitalization(1)
(in PLN millions)		465,115		715,822		796,482		642,863		713,608
(in U.S.$ millions)		157,038		251,139		268,710		188,115		228,787
(% of GDP)		44		53		56		42		47
Turnover in PLN millions(2)		331,316		345,864		234,288		268,139		59,261
WIG index		27,229		39,986		47,490		37,595		41,267
Average P/E ratio		11.0		14.3		18.2		12.5		10.6
Dividend Yield		3.1		3.6		2.4		2.9		3.8
Listed companies
Main Market		374		379		400		426		429
NewConnect		84		107		185		351		370

____________

Notes:

(1)	Includes domestic and foreign companies.

(2)	One-sided (single counted) turnover including session and off-session (block transactions) of shares.

Source: Ministry of Finance, NBP, WSE

Investment Funds

By the end of March 2012, the PFSA had granted permits to 50 fund management companies managing 513 investment funds. The value of assets managed by Polish investment funds in December 2011 was PLN 134.9 billion (U.S.$ 39.5 billion).

Pension Funds

By the end of March 2012, the relevant supervisory authority had granted permits to 14 fund management companies managing 14 pension funds. The value of assets managed by Polish pension funds in March 2012 achieved a level of PLN 337.9 billion (U.S.$ 76.3 billion).

Treasury securities

Treasury bonds and bills denominated in PLN are sold at regular auctions by the State Treasury. The primary domestic market is based on a selected group of banks acting as primary dealers.

The following table sets forth certain information with respect to the sale of treasury securities on the domestic market for the periods indicated:

		Q1 2011	Q2 2011		Q3 2011		Q4 2011		2011		Q1 2012
	(nominal amount, PLN billions)
Gross sales of treasury securities
Treasury bonds		27.3	34.4		24.4		22.7		108.8		39.9
Treasury bills		13.4	5.3		0		0		18.7		10.3
Total		40.7	39.7		24.4		22.7		127.6		50.2
Net sales of treasury securities
Treasury bonds		21.7	7.4		(10.5	)	3.4		21.9		21.9
Treasury bills		3.8	(3.8	)	(10.4	)	(5.6	)	(16.0	)	(1.2	)
Total		25.4	3.6		(20.9	)	(2.2	)	5.9		20.7

Source: Ministry of Finance

Trading of Treasury bonds is conducted on three secondary markets: the OTC market, Treasury BondSpot Poland and the WSE. In 2011, the value of Treasury bond transactions increased by 29.4 percent to PLN 10,748.8 billion, compared to 2010. The most significant market by value is the

OTC market which in 2011 accounted for 90.4 percent of the total turnover of Treasury bonds. Turnover on Treasury BondSpot Poland amounted to 9.6 percent, while trading on the WSE did not exceed 0.1 percent. In the first quarter of 2012, the value of Treasury bond transactions amounted to PLN 2,369.8 billion. Turnover on the OTC market accounted for 89.0 percent, and 11.0 percent on Treasury BondSpot Poland, while trading on the WSE remained at a marginal level.

The main holders of Treasury bonds issued on the domestic market at the end of February 2012 were domestic institutional investors (non-banking sector) representing PLN 245.7 billion (46.7 percent), the domestic banking sector representing PLN 119.5 billion (22.7 percent) and foreign investors representing PLN 160.5 billion (30.5 percent).

The average time to maturity (“ATM”) of domestic marketable debt decreased slightly from 4.30 years at the end of December 2010 to 4.25 years at the end of December 2011 and then increased to 4.28 years at the end of February 2012. The duration decreased from 2.97 years at the end of December 2010 to 2.80 years at the end of December 2011 and then increased to 2.88 years at the end of February 2012.

Insurance market

As at December 31, 2011, the total assets of Poland’s insurance companies amounted to approximately PLN 146.13 billion while the assets of the life insurance sector amounted to approximately PLN 89.86 billion. The assets of the non-life insurance sector were PLN 56.28 billion as at December 31, 2011. Investments of insurance companies were primarily held in debt securities and other fixed income securities (44.7 percent), followed by deposits with credit institutions (9.9 percent), shares or participating interests in subordinated undertakings (7.4 percent) and shares, participating interests and other variable yield securities, units and investment certificates in investment funds (6.6 percent).

According to industry data, as at December 31, 2011, the largest market share, by gross premiums written, was held by PZU Życie S.A. (17.16 percent), followed by PZU S.A. (14.43 percent), STU ERGO Hestia S.A. (4.63 percent) and TUnŻ Europa S.A. (4.49 percent). As at December 31, 2011, there were 45 insurance companies controlled by foreign investors (compared to 45 as at December 31, 2010 and 47 as at December 31, 2009). As at December 31, 2011, FDI in the insurance market reached PLN 4.47 billion, compared to PLN 4.47 billion as at December 31, 2010 and 4.24 billion as at December 31, 2009. As at December 31, 2011, foreign capital accounted for 77.1 percent of the total equity capital of insurance companies in Poland, compared to 77.9 percent at the end of 2010 and 77.9 percent at the end of 2009. As at December 31, 2011, there were 61 licensed insurance companies operating in Poland, of which 28 were life insurance companies and 33 were non-life insurance companies.

PUBLIC FINANCE

The Polish public finance system is comprised of the State budget, local budgets, extra-budgetary units, agencies and other entities. It is divided into three sub-sectors: central, local and social security. There are some differences in the scope of the sector and accounting methods as compared to the general government sector (as defined in the EU’s European System of Accounts 95 (“ESA 95”).

The Polish methodology differs from ESA 95 in two significant respects:

●	under ESA 95, revenues and expenditures are calculated on an accrual basis, whereas a cash basis is used under the Polish methodology; and

●	the scope of the public sector is defined differently under the two methodologies (for example funds formed within BGK, i.e., the National Road Fund and the Railway Fund, are excluded under Polish methodology and included under ESA 95).

In 2011, the general government balance decreased by about 2.7 percentage points of GDP (from 7.8 percent of GDP in 2010 to 5.1 percent of GDP in 2011). Significant improvement of general government balance can be attributed to measures that reduced public spending and increased government revenue. Expenditure of the general government to GDP ratio declined from 45.4 percent of GDP in 2010 to 43.6 percent of GDP in 2011. The most significant cuts were made to social spending (reduced by 0.8 percentage points of GDP), public consumption (reduced by 0.8 percentage points of GDP) as a result of lower employee compensation growth (frozen wage bill) and intermediate consumption growth. Increased revenue was derived mainly from higher VAT, freeze in personal income tax (“PIT”) thresholds and increase in the share of the pension contribution in the public pillar.

In 2012, the Government expects the general government balance to reach 2.9 percent of GDP. As compared with 2011, the reduction of 2.2 percentage points will be achieved by policies introduced in previous years (e.g., a spending rule that caps the increase in flexible and new legally mandated expenditure, a frozen wage bill), cuts in gross capital formation and new measures aimed at increasing revenues. These include raising the disability contribution (effectively a payroll tax) by 2 percentage points and introducing a new copper and silver royalty charge.

The government intends to reach the medium term objective for the deficit (1 percent of GDP) by 2015. The measures that will ensure long-term stability of public finances in Poland include further structural reforms of the social security system (such as increase and equalization of the retirement age for men and women at 67 years, from present levels of 65 and 60 years, respectively), as well as introduction of the new permanent fiscal rule. According to the new permanent fiscal rule, the limit for the general government expenditures (excluding the expenditures of the local government sub-sector, expenditures financed with the non-returnable EU aid funds and debt interest payments) will be calculated based on the equivalent limit for the previous year (adjusted for the inflation forecast errors), CPI forecast and the medium-term real GDP growth subject to corrections if cumulated deviations of a nominal balance from the medium-term budgetary objective (MTO) exceed a certain threshold. The limit will be also adjusted for the expected change in structural revenues. The introduction of this rule and the accompanying changes to the domestic fiscal framework will also ensure compliance with the Council Directive of November 8, 2011 on requirements for budgetary frameworks of the Member States.

General Government Balance

The following table sets out the general government balance (calculated pursuant to ESA 95) for the years indicated:

	2007			2008			2009			2010			2011
	(as a % of GDP)
General government balance		(1.9	)		(3.7	)		(7.4	)		(7.8	)		(5.1	)
Central government		(3.1	)		(3.9	)		(5.4	)		(6.4	)		(4.3	)
Local government		0.1			(0.2	)		(1.1	)		(1.2	)		(0.7	)
Social security funds		1.1			0.4			(0.9	)		(0.2	)		(0.1	)

————

Source: Central Statistical Office

The following table sets out State budget revenues and expenditures using the Polish methodology for the years indicated:

	2007			2008			2009			2010			2011			2012(1)
	(PLN millions, except as otherwise indicated)
Total revenue		236,368			253,547			274,184			250,303			277,568			293,766
Total expenditure		252,324			277,893			298,028			294,894			302,681			328,766
Balance		(15,956	)		(24,346	)		(23,844	)		(44,591	)		(25,113	)		(35,000	)
GDP (PLN billions)		1,175			1,275			1,344			1,416			1,525			1,590
	(as a % of GDP)
Total revenue		20.1			19.9			20.4			17.7			18.2			18.5
Total expenditure		21.5			21.8			22.2			20.8			19.8			20.7
Balance		(1.4	)		(1.9	)		(1.8	)		(3.1	)		(1.6	)		(2.2	)

__________

(1)

From the 2012 Budget Act, without EU resources budget. Data do not include payments which will be made by the Central Bank in 2012 to the State budget (PLN 8.205 million) as a result of profits of the Central Bank for 2011. Payments from the NBP have not been originally assumed in the Budget Act for 2012.

Source: Ministry of Finance, Central Statistical Office

The following table sets out certain information regarding total revenues and expenditure for local governments for the years indicated:

	2007		2008			2009			2010			2011
	(PLN millions, except for percentages)
Total revenues		131,38		142,569			154,842			162,797			171,309
Total expenditure		129,113		145,183			167,828			177,766			181,595
Balance		2,267		(2,614	)		(12,986	)		(14,970	)		(10,286	)
As % of GDP		0.2		(0.2	)		(1.0	)		(1.1	)		(0.7	)
GDP		1,176,700		1,275,432			1,344,383			1,416,392			1,524,659

__________

Source: Ministry of Finance, Central Statistical Office

The State Budget

The Budget Process

The fiscal year for the Government is the calendar year. Under the Constitution, the Council of Ministers must present a draft budget to the Sejm at least three months prior to the start of each fiscal year. The budget then proceeds through the regular legislative process. If a budget has not been approved by the Sejm and the Senate before the beginning of the new fiscal year, the Government is empowered by law to manage public finances on the basis of the draft budget until a budget is adopted. If no budget has been agreed by Parliament and presented to the President for signing within four months of the Council of Ministers submitting the draft to the Sejm, the President may dissolve Parliament.

The 2012 Budget Act

On January 27, 2012, the Sejm approved the draft 2012 Budget Act. It provides for revenues of PLN 293.8 billion and expenditures of PLN 328.8 billion. The 2012 Budget Act was signed by the President on March 7, 2012.

The following table sets out State revenues in nominal terms and as a percentage of GDP for the years indicated:

	2007		2008		2009		2010		2011		2012(1)
	(PLN millions)
NOMINAL REVENUES
Tax Revenue		206,385.2		219,499.4		214,878.8		222,552.7		243,209.4		264,803.0
VAT and other Indirect taxes		146,482.1		153,677.7		154,957.7		165,189.6		180,272.6		196,118.0
Corporate Income Tax		24,540.2		27,159.7		24,156.6		21,769.9		24,861.9		26,635.0
Personal Income Tax		35,358.5		38,658.5		35,763.7		35,592.6		38,074.9		40,250.0
Non-tax Revenue		22,448.3		19,308.9		27,433.4		24,501.6		32,276.0		27,125.2
Dividends		3,622.5		3,319.8		8,326.5		4,977.1		6,122.9		8,153.5
Transfers from the NBP		2,478.3		-		-		3,957.3		6,202.7		-
Custom Duties		1,747.6		1,728.8		1,627.5		1,663.7		1,923.8		1,830.0
Payments, fees, interests and others		12,733.9		12,095.5		14,777.3		11,176.9		15,642.8		14,734.8
Local government payments		1,866.0		2,164.8		2,702.0		2,726.7		2,383.8		2,406.9
Contributions to State budget from EU		-		-		-		-		-		-
Revenue from EU and other non-returnable means		7,534.1		14,739.0		31,871.3		3,248.5		2,082.9		1,837.9
TOTAL REVENUE		236,367.5		253,547.3		274,183.5		250,302.8		277,568.3		293,766.1
	(Revenues as a percentage of GDP)
GDP		1,176,737		1,275,432		1,344,383		1,416,392		1,524,659		1,589,618
Tax Revenue		17.5		17.2		16.0		15.7		16.0		16.7
VAT and other Indirect taxes		12.4		12.0		11.5		11.7		11.8		12.3
Corporate Income Tax		2.1		2.1		1.8		1.5		1.6		1.7
Personal Income Tax		3.0		3.0		2.7		2.5		2.5		2.5
Non-tax Revenue		1.9		1.5		2.0		1.7		2.1		1.7
Dividends		0.3		0.3		0.6		0.4		0.4		0.5
Transfers from the NBP		0.2		-		-		0.3		0.4		-
Custom Duties		0.1		0.1		0.1		0.1		0.1		0.1
Payments, fees, interests and others		1.1		1.0		1.1		0.8		0.9		0.9
Revenue of Budgetary Units		0.2		0.2		0.2		0.2		0.2		0.2
Contributions to State budget from EU		-		-		-		-		-
Revenue from EU and other non-returnable means		0.6		1.2		2.4		0.2		0.1		0.1
TOTAL REVENUE		20.1		19.9		20.4		17.7		18.2		18.5

__________

(1)	Data do not include payments which will be made by the Central Bank in 2012 to the State budget (PLN 8.205 million) as a result of profits of the Central Bank for 2011. Payments from the NBP have not been originally assumed in the Budget Act for 2012.

Source: Ministry of Finance

The following table sets out certain information regarding State budget expenditure in nominal terms and as a percentage of GDP for the years indicated.

	2007		2008		2009		2010		2011 (4)		2012 (5)
	(PLN millions)
TOTAL STATE BUDGET EXPENDITURES		252,324		277,894		298,028		294,894		302,682		328,766
of which
Subsidies (1)		1,951		2,832		3,170		3,960		4,690		5,187
Foreign Debt Service		4,890		5,122		6,675		7,386		8,849		10,770
Social Insurance		54,225		64,037		64,010		71,766		72,317		76,894
Current Expenditures of the Budget Sphere		90,422		96,399		93,073		97,133		100,324		108,623
Domestic Debt Service and Guaranties		22,609		19,995		25,553		26,757		27,107		32,226
Capital Expenditures (2)		13,260		14,920		14,654		15,439		14,915		14,871
Subsidies to Local Authorities (3)		36,756		40,460		45,043		47,185		48,348		50,218
EU own resources		10,629		12,213		13,418		14,345		14,731		16,146
Financing EU co-financed projects		17,582		21,916		32,432		x		x		x
Co-financing EU projects		x		x		x		10,923		14,731		13,741

	(Expenditures as a percentage of GDP)
TOTAL STATE BUDGET EXPENDITURES		21.4		21.8		22.2		20.8		19.9		20.7
of which
Subsidies (1)		0.2		0.2		0.2		0.3		0.3		0.3
Foreign Debt Service		0.4		0.4		0.5		0.5		0.6		0.7
Social Insurance		4.6		5.0		4.8		5.1		4.7		4.8
Current Expenditures of the Budget Sphere		7.7		7.6		6.9		6.9		6.6		6.8

Domestic Debt Service and Guaranties	1.9	1.6	1.9	1.9	1.8	2.0
Capital Expenditures (2)	1.1	1.2	1.1	1.1	1.0	0.9
Subsidies to Local Authorities (3)	3.1	3.2	3.4	3.3	3.2	3.2
EU own resources	0.9	1.0	1.0	1.0	1.0	1.0
Financing EU co-financed projects	1.5	1.7	2.4	x	x	x
Co-financing EU projects	x	x	x	0.8	0.7	0.9

GDP (PLN millions)	1,176,737	1,275,432	1,344,383	1,416,392	1,524,659	1,589,618

______________

Notes:

From 2010, financing EU resources budget is excluded from state budget (without part concerning technical assistance and national co-financing).

(1)	Subsidies to enterprises.

(2)	Capital expenditures include investments and equity contributions.

(3)	General subventions to local governments.

(4)	Expected execution.

(5)	As provided in the 2012 Budget Act.

x	Not available

Source: Ministry of Finance

Financing the State Budget Deficit

The State Treasury finances the budget deficit by issuing its own debt securities (known as “Treasury securities”) in the domestic as well as the international markets and accepting funding from international financial institutions (loans from the European Investment Bank (“EIB”) and the World Bank). Treasury securities may be issued as Treasury bills (instruments with a maturity of up to one year) or as Treasury bonds (instruments with a maturity of more than one year). The main objective of the State Treasury’s debt management strategy is minimization of long-term debt servicing costs subject to maintaining appropriate risk levels (refinancing, exchange rate, interest rate and liquidity risks). Subject to this overall debt management strategy, the State Treasury has flexibility in terms of choosing which market, currency and instrument type to issue.

The State’s budget deficit in 2011 was lower than expected in the 2011 Budget Act and amounted to approximately PLN 25 billion, while total net borrowing requirements amounted to PLN 27 billion and gross borrowing requirements to PLN 136 billion. Borrowing requirements in 2011 were financed mainly by issuances in the domestic market (81 percent) with Treasury bond issuances in the international markets representing 13 percent of total issues of Treasury securities. Some additional funding (6 percent) was obtained from the EIB and the World Bank.

Financing in the domestic market in 2011 was mainly obtained through the sale of Treasury bonds. Of all Treasury Bonds sold, medium-term bonds (3-5 years) amounted to 44 percent, issuance of short-term bonds (up to 2 years) amounted to 34 percent and long-term bonds amounted to 22 percent. In 2011, the main demand in the domestic market came from foreign investors and, as a result, their holdings of domestic Treasury securities reached record levels. Foreign financing mainly consisted of issues of Treasury bonds denominated in U.S. dollars and euro (small issuances were also conducted in Swiss francs and Japanese yen). The State Treasury’s debt at the end of 2011 had an average term to maturity of 5.4 years. The share of foreign debt increased from 28 to 32 percent as a result of PLN depreciation.

The budget deficit for 2012 is projected to amount to PLN 35.0 billion according to the 2012 Budget Act, while total net and gross borrowing requirements for 2012 are expected to amount to PLN 46.2 billion and PLN 176.1 billion, respectively. As in previous years, the process of funding complies with the main strategic objective and the flexibility in choosing the market, currency and instrument type. The major part of funding is being received from the domestic Treasury bond market with the financing structure depending on the market situation. Funding from international Treasury bond markets and from international financial institutions are expected to correspond to 2011 levels. As of May 23, 2012, 69 percent of gross borrowing requirements had been financed.

Revenues

The principal source of the State’s budgetary revenues is taxation. The principal taxes in the Polish tax system are a tax on goods and services (“VAT”), corporate income tax (“CIT”), personal income tax (“PIT”) and excise tax. There are also local taxes collected directly by the local authorities or tax offices acting on behalf of such authorities. Local taxes include agricultural tax, forest tax, real property tax and transport vehicles tax.

Value Added Tax

VAT levied on the supply of goods and services and other activities in Poland complies with the rules of Council Directive 2006/112/EC on the common system of value added tax. The following VAT rates apply (from January 1, 2011):

●	a standard rate of 23.0 percent; and

●	reduced rates of:

●

8.0 percent (for example, on certain food items, medicines, public transport, restaurant services, new housing structures and housing construction services covered by the social housing program);

●

5.0 percent (for example, on certain unprocessed agricultural products, books and specialist periodicals); and

●

0 percent (for exports and intra Community supplies and selected services such as international transport).

Furthermore, the VAT system provides for exemptions (without the right to deduct the input tax) for certain services, such as educational, healthcare and welfare and financial services (with exceptions).

Corporate Income Tax

In order to increase the competitiveness of the Polish economy, the CIT rate has been gradually reduced from 40.0 percent at the end of 1996 to the current rate of 19.0 percent.

For the purposes of the equal treatment of entities located in Poland and in other EU member states, provisions regarding the taxation of dividends were changed with effect from January 1, 2007. Currently, dividends are subject to a 19.0 percent withholding tax, unless a relevant double taxation treaty provides otherwise. Nevertheless, income from dividends is exempted from taxation if dividends are paid by a Polish company to entities with their seat in Poland, another EU member state, an EEA member state or to Switzerland and certain other specific requirements are fulfilled.

Interest and royalties paid to foreign entities are subject to a 20.0 percent withholding tax, unless a relevant double taxation treaty provides otherwise. From July 1, 2013, interest and royalties will be exempted from income tax, provided that the amounts are received by a company located in an EU member state (other than Poland) or Switzerland. Certain other requirements must be satisfied as well, particularly that interest and royalties are paid by a Polish company or a foreign permanent establishment located in Poland and the beneficial owner is a company subject to income tax in another EU member state or Switzerland. However, during the transitional period from July 1, 2009 until June 30, 2013, the rate of income tax on interest and royalties is fixed at 5.0 percent. Since January 1, 2011, all EEA member states (other than Poland) have been covered by these preferential provisions.

Personal Income Tax

In 2011, PIT was levied on personal income at progressive tax rates starting at 18.0 percent on the initial PLN 85,528 earned and increasing to 32.0 percent on earnings above that threshold. Taxpayers who operated a business are entitled to choose a different form of income taxation with a flat rate of 19.0 percent. In a limited number of cases, those taxpayers can choose to pay income tax on a lump-sum basis. Income from selling securities and other financial instruments is subject to an

income tax rate of 19.0 percent, which is specified in a separate tax return and sent at the end of the tax year.

Excise Tax

From May 2004 until March 2009, excise goods were divided into (a) harmonized goods, such as energy products, alcohol beverages (ethyl alcohol, intermediary products, fermented beverages, wine and beer) and tobacco products and (b) non-harmonized goods, such as electricity, cars, cosmetics and gambling machines.

New excise provisions came into effect on March 1, 2009. Since then, products subject to excise include energy products, electricity, alcoholic beverages, manufactured tobacco and cars. These provisions also resulted in various changes to excise rates, including an increase in the excise rates on ethyl alcohol, beer, wine, cigars and certain automobiles. In 2011, higher excise duty rates on cigarettes, cigars and fine cut tobacco as well as changes in reliefs for biofuels were introduced. Additionally, from January 2012 coal and coke for heating purposes, which were originally exempted from excise duty due to transitional periods granted by the EU, are subject to tax. However, a number of exemptions for coal products are provided.

As of December 31, 2011, the State revenue from excise duty according to preliminary data amounted to PLN 57,963.7 million.

Social Security System

Expenditure

A major component of State expenditure is social security payments. Four social security and pension funds are administered by the State and are partially or wholly financed by contributions from employers and employees. The revenues of these funds are not shown as revenues in the State budget. Two of these funds do, however, receive significant transfers from the State budget and such transfers are shown as expenditures in the tables under “Public Finance”. The Social Insurance Fund and the Pension and Disability Fund (for farmers) are the largest extra-budgetary funds and rely on State budget transfers to supplement their own off-budget revenues.

Direct Budgetary Social Expenditure

The growth of social expenditure paid directly from the State budget or paid as transfers from the State budget to extra-budgetary funds and their projected continued growth based on current legal entitlements and demographic trends, represent a significant threat to Poland’s ability to limit its State budget deficit in the medium term.

The refund in respect of the transfer of contributions to open pension funds (“OPFs“), amounted to, according to preliminary data, PLN 15.4 billion in 2011, compared to PLN 14.9 billion in 2006 (see “Pension System Reform” below). The transfers are reflected in the budgetary expenditure in macroeconomic terms representing a long-term saving for the whole economy and reducing the negative impact of the budget deficit on national savings. The transfers amounted to PLN 16.2 billion in 2007, PLN 19.9 billion in 2008, PLN 21.1 billion in 2009 and PLN 22.3 billion in 2010.

Pension System Reform

On January 1, 1999, Poland introduced a new multi-pillar pension system. The first pillar is a pay-as-you-go, notional defined contribution system, where pensions are directly linked with contributions, which ensure that in the long-term pension expenditure will be fully financed by contributions. Such formula is expected to contribute to improving public finances. The second pillar is a privately managed, funded defined contribution system. The third pillar comprises voluntary savings schemes, such as employee pension schemes and individual pension insurance policies. Participation in the first two pillars is mandatory. The first pillar received 12.22 percent and the

second 7.30 percent of the total 19.52 percent pension contribution (in the form of an earmarked payroll tax).

The goal of the recent Polish pension reforms is to reduce the pressure on public finances (by introducing a defined contribution formula in the public “pay-as-you-go” system), support the development of domestic capital markets and diversify and increase future pensions (based on investments in equity markets). Simultaneously, however, the introduction of the second pillar is a substantial burden for public finances in the short and medium term due to the fact that its pension funds are outside the public sector and transfers from the pension funds to the second pillar are recorded as expenditure according to ESA 95.

Because of continuing high costs relating to the pension system reform, from May 1, 2011, the government introduced the following changes to the pension system:

●

Transfers to private pension funds were initially reduced to 2.3 percent (from the then-existing 7.3 percent) and will be gradually increased to 3.5 percent in 2017. The decrease in the contribution to OPFs will be offset by a corresponding increase in the contribution to State pension funds and, as a result, each employee’s total contribution will continue to be at 19.52 percent of the employee’s gross salary.

●

A part of the second pillar contribution was diverted to a new, separate, public, pay-as-you-go, notional defined contribution pillar. This is very similar to the existing first pillar except for indexation (nominal GDP growth rather than wage bill growth) and bequest rules (allowed up to 36 months after retirement, similar to the existing second pillar).

●	The existing assets in the funded pension funds in Poland remain unaffected – only new contributions were altered.

●

Pension funds will have their equity investment limits gradually lifted to allow for similar in value purchases of equities despite lower contribution. From pensioners’ perspective, a similar percentage of total pension contribution (combined first and second pillars) are still invested in equities.

●	Tax incentives for additional pension savings within existing pension funds were introduced.

At the end of 2011, there were 14 second pillar pension funds with more than 15.5 million members accounting for PLN 224.72 billion of net pension fund assets. On December 31, 2011, Treasury securities and stocks listed on the WSE constituted the majority of total assets held by OPFs (accounting for 52.9 and 30.4 percent of total assets held by pension funds, respectively). The investment strategy of pension funds is strictly regulated by law.

Healthcare System

Currently, management of the healthcare system is coordinated by a national health fund, into which employers are required to make a mandatory payment of 9.0 percent of each individual employee’s wages. The budget expenditure on healthcare amounted to PLN 8.4 billion in 2011.

Extra Budgetary Funds

The following table sets out certain information regarding selected extra budgetary funds for the years indicated:

	2007		2008		2009		2010		2011	*
	(PLN millions)
Social Insurance Fund
Revenues		129,721		137,330		141,014		167,481	162,036
Transfers from State budget		23,893		33,230		30,503		38,112	37,513
Transfers to Open Pension Funds		16,219		19,911		21,086		22,347	15,431
Expenditure		123,755		136,133		153,359		170,845	167,786
Pension Fund
Revenues		15,942		16,185		17,064		16,348	16,567
Transfers from State budget		14,681		14,868		15,705		14,936	15,120
Expenditure		15,460		16,794		17,046		16,575	16,499
Labor Fund
Revenues		8,386		9,110		10,326		10,963	10,487
Budget transfers		287		322		352		323	324
Expenditure		5,353		5,756		11,245		12,235	8,744
Health Fund
Revenues		44,020		52,810		56,938		57,586	60,723
Budget transfers to National Health Fund		3,717		5,236		5,672		5,238	5,338
Health premiums financed by State budget		2,542		3,684		3,782		3,298	3,355
Funds for execution of commissioned tasks		12		10		1		0
State budget subsidy for healthcare of specific type of beneficiaries		17		73		167		213	225
State budget subsidy for medical rescue units		1,146		1,469		1,722		1,726	1748
Transfers from National Health Fund to State budget		80		0		0		0
Expenditure		42,257		51,658		57,633		59,326	60,923

____________

Source: Ministry of Finance

* Preliminary data.

PUBLIC DEBT

Overview

For reporting purposes relating to external and internal debt, Poland classifies as public debt only debt incurred directly by the State (State Treasury debt), by local governments and by entities within the public finance sector. It does not include debt incurred by State-owned financial institutions, other State-owned enterprises or the NBP.

In addition, the State Treasury provides certain State guarantees and sureties to cover the liabilities of Polish entities. As at December 31, 2011, the amount of such guarantees (including expected interest payments) was PLN 94.3 billion, of which PLN 34.6 billion related to guarantees of Polish entities indebted to foreign entities.

The following table sets out total public sector debt as at the dates indicated:

	As at December 31,
	2007		2008		2009		2010		2011(1)
	(PLN millions)
Public finance sector debt		527,442		597,764		669,876		747,899		815,323
Central government sector debt		500,214		566,883		623,592		692,360		748,813
of which
State Treasury debt		498,963		565,462		622,390		691,210		747,504
Local government sector debt		24,483		28,107		39,325		53,519		64,231
Social Security sector debt		2,745		2,775		6,960		2,019		2,279

____________

(1)	Preliminary data.

Source: Ministry of Finance

State Treasury Debt

The Ministry of Finance classifies debt as internal or external according to two criteria: the place of issuance and residence of the targeted investors. All instruments issued in the domestic market, regardless of the status of their holder (domestic or foreign), are classified as internal debt and all instruments are classified as external or internal according to the residence of the holder, regardless of the market in which the instruments are issued. In “Total External Debt”, Poland’s gross external debt is classified on the basis of the residence of the creditor. For purposes of this section, where debt is classified as internal or external based on the place of issue criterion, internal and external debt will be referred to as domestic debt and international debt, respectively.

In nominal terms, Poland’s total State Treasury debt has grown from PLN 501.5 billion at the end of 2007 to PLN 772.4 billion at the end of February 2012.

Between 2003 and 2011, Poland repurchased the majority of its outstanding Brady Bonds, issued by the State Treasury in 1994 to Poland’s creditors in connection with its commercial debt restructuring.

The following table sets out categories of the State Treasury’s debt as at the dates indicated as aggregate amounts and as percentages of nominal GDP:

	As at December 31,										As at February 29,
	2007		2008		2009		2010		2011		2012
	(PLN millions except for percentages)
Domestic State Treasury Debt		380,392		420,020		462,734		507,011		524,689		534,850
as a percentage of GDP		32.3		32.9		34.4		35.8		34.4		-
International State Treasury Debt		121,139		149,926		168,773		194,840		246,438		237,585
as a percentage of GDP		10.3		11.8		12.6		13.8		16.2		-
Total State Treasury Debt		501,531		569,946		631,506		701,851		771,127		772,435
as a percentage of GDP		42.6		44.7		47.0		49.6		50.6		-
GDP		1,175,266		1,275,432		1,344,383		1,416,392		1,524,659		-

____________

Source: Ministry of Finance

Debt Management

Under Polish law, the Minister of Finance supervises the level of public debt. This supervision is two-fold: direct (in the case of the State Treasury) and indirect (in the case of other entities in the public finance sector which are autonomous in contracting liabilities).

Polish regulations primarily seek to restrict the growth of public debt by establishing limits on the public debt to GDP ratio. The Polish Constitution prohibits the incurrence of liabilities resulting in public debt exceeding 60.0 percent of GDP, whereas the Public Finance Act sets thresholds at 50.0, 55.0 and 60.0 percent of GDP, violation of which is followed by certain requirements to prevent the constitutional limit from being breached. As set forth in the draft budget adopted by the Council of Ministers in a given year, when the ratio in year x is between 50.0 and 55.0 percent, the state budget deficit to state budget revenue ratio for year x+2 cannot be higher than in the year x+1. As the ratio of public debt to GDP was 53.5 percent in 2011, the deficit to revenue ratio in the draft budget for 2013, due to be submitted to the Parliament by the end of September 2012, cannot be higher than 11.9 percent, which is the ratio adopted in the budget for 2012.

When the ratio in year x is between 55.0 and 60.0 percent, the following measures are implemented:

(a)	the difference between state budget revenues and expenditures in the draft budget adopted by the Council of Ministers in the year x must ensure the decrease in State Treasury debt to GDP ratio for the year x+2 from the ratio announced for the year x;

(b)

the budget deficit of local government units will be reduced by the use of cumulated budgetary surpluses from previous years and liquid funds in the budget resolution for the year x+2 can only derive from expenditures for ongoing tasks co-financed from EU funds or non-returnable financial aid provided by EFTA member countries;

(c)

in the draft budget adopted by the Council of Ministers for the year x+2: (1) no increase in salaries of public sector employees will be assumed, (2) revaluing of pensions must not exceed the CPI level in the budgetary year x+1, (3) a ban on granting new loans and credits from the State budget will be introduced, and (4) the expenditures of the Sejm, the Senate, the Presidential Chamber, the Constitutional Tribunal, the Supreme Chamber of Control (NIK), the Supreme Court, the Primary Administration Court, the common courts of law and provincial administration courts, the Spokesman of Citizen Rights, the Spokesman of Child Rights, the National Board of Radio and Television, the General Inspector for the Security of Personal Data, the Institute of National Remembrance – Commission for the Prosecution of Crimes against the Polish Nation, the National Electoral Office and the National Labor Inspection will not be higher than in the government administration;

(d)	the Council of Ministers will conduct a review of (1) State budget expenditures financed by foreign credits and (2) long-term programs;

(e)	the Council of Ministers will present a remedial program ensuring a decrease in the ratio of public debt to GDP;

(f)	the Council of Ministers will make a review of regulations in force to propose possible legal solutions which may influence state budget revenues, including VAT rates;

(g)	VAT rates for the subsequent three years following year x will be increased;

(h)	the State Fund for the Rehabilitation of Disabled Persons will receive earmarked subsidies from the state budget for co-financing of disabled worker salaries at the level of 30.0 percent of planned funds for that year; and

(i)

new liabilities will only be incurred by government administration if those investments are co-financed from EU funds or non-returnable financial aid provided by EFTA member countries at the maximum level, as set out in the rules or procedures for particular types of investments, which is not lower than 50.0 percent of the total costs of those investments.

These restrictions, however, would not apply to state road rebuilding or repairs required for road traffic hazard removal, anti-flood infrastructure investments, electronic toll service and compensations for properties taken over for public road investments. Where public debt exceeds 60.0 percent in a given year and items (a), (c), (d), (f), (g) and (h) above are in force, budgets of local government units for year x+2 must be balanced, the granting of new sureties will be banned and guarantees by public finance sector entities will be introduced. In addition, the Council of Ministers will present a remedial program to the Parliament aimed at reducing the ratio of public debt to GDP below 60.0 percent.

Since the accession to the EU, Poland has also been obliged to observe the Maastricht Criteria, including with regard to deficit (3.0 percent of GDP) and public debt (60.0 percent of GDP) limits. Failure to meet the Maastricht Criteria could result in a delay to Poland’s ability to adopt the euro. In May 2009, the European Commission announced that it had initiated an excessive deficit procedure for Poland, due to the fact that Poland’s budget deficit exceeded the 3.0 percent threshold established by the Maastricht Criteria. Poland was previously under an excessive deficit procedure from 2004 until July 2008. See “Public Finance”.

The objective of the debt management strategy as stated in the Public Finance Sector Debt Management Strategy in the years 2012-2015 (approved by the Council of Ministers in December 2011) is the minimization of long-term debt servicing costs subject to maintaining appropriate levels of refinancing risk, exchange rate risk, interest rate risk, State budget liquidity risk, other risks (in particular credit and operational risk) and distribution of debt servicing costs over time.

Refinancing Risk

In an attempt to manage refinancing risk, an increase of the role of medium- and long-term instruments in financing the State budget borrowing requirements in the domestic market is aimed at meeting investor demand. The debt management strategy aims for an even distribution of redemptions and interest payments of domestic and foreign debt in subsequent years. Further, it is intended for the ATM of domestic debt to be at least 4.5 years by 2015. It is assumed that the current level of foreign debt refinancing risk does not restrain cost minimization.

Exchange Rate Risk

In an attempt to manage exchange rate risk, the debt management strategy is designed to maintain the exchange rate risk measured by the share of foreign currency debt in State Treasury debt between 20.0 and 30.0 percent and an effective (after swaps) share of the euro of at least 70.0 percent, subject to possible temporary deviations from these targets due to high volatility of exchange rates or severe

turmoil on the markets. Derivatives may also be used in managing the exchange rate risk in order to target the currency structure of debt.

Interest Rate Risk

In an attempt to manage interest rate risk, the debt management strategy is designed to maintain the term of domestic debt between 2.5 and 4 years and to separate the management of the interest rate and refinancing risks by using floating rate bonds, inflation-linked bonds and derivatives. It is assumed that the current level of foreign debt interest rate risk does not restrain cost minimization.

State Budget Liquidity Risk

In an attempt to manage State budget liquidity risk, the debt management strategy is designed to maintain an adequate level of liquid State budget funds while managing them efficiently and budgeting the supply of Treasury securities appropriately throughout the year, taking into account seasonal considerations as well as current and expected market conditions. Use of foreign currencies and State Treasury financial assets in managing domestic currency liquidity needs is possible. The debt management strategy contemplates use of liquid funds from selected public finance sector entities, including the State special purpose funds, to aid in managing the State budget liquidity.

Credit Risk and Operational Risk

In an attempt to manage credit and operational risks, the debt management strategy includes entering into derivatives transactions with domestic and foreign entities of high creditworthiness. Diversification of the various derivative instruments is an important component of this approach.

Distribution of Debt Servicing Costs Over Time

Two goals of the debt management strategy involve setting bond coupons at levels close to their yields over the sales period and the smooth distribution of annual debt servicing costs, in each case through the use of available instruments, especially switching auctions and derivatives.

The objective of the debt management strategy is pursued through two key strategies:

●	choosing instruments, market structure and issuance dates which minimize costs within the timeframe of debt instruments with the longest maturities and the most significant debt volume share; and

●

increasing the efficiency of the Treasury securities market, which entails aiming to have the spread between Treasury securities issued by Poland and EU countries with the highest credit ratings reflect only the difference in creditworthiness between the nations and not inefficiencies in the organization or infrastructure of the Treasury securities market.

The scope of implementing the cost minimization objective provides for flexibility in choosing the market, currency and instrument type in financing the borrowing requirements. The domestic market will remain the main source of financing for the State budget borrowing requirements. Foreign markets issuance should primarily:

●	ensure diversification of Poland’s investor base in major financial markets;

●	take into account the foreign currency borrowing requirements, including principal and interest payments on foreign debt;

●	maintain Poland’s position on the euro market and build the position on the U.S. dollar market as a complementary financing market;

●	access attractive financing in international financial institutions; and

●	stabilize the domestic market through:

●

ensuring the security of financing the State budget borrowing requirements in the case of temporary disturbances on the domestic market;

●

absorbing a part of foreign investors’ demand for Polish Treasury Securities rather than foreign investors’ use of the domestic market; and

●

allowing for the sale of currencies on the foreign exchange market and at the NBP as an instrument of foreign demand management of the State budget and utilizing funds raised on international markets to finance its borrowing requirements in the national currency.

Internal State Treasury Debt

Poland’s internal State Treasury debt has increased from PLN 380.4 billion (32.3 percent of GDP) at the end of 2007 to PLN 524.7 billion at the end of 2011 (34.4 percent of GDP) and to PLN 534.9 billion at the end of February 2012.

The internal public debt comprises three categories:

●

marketable Treasury securities with maturities of up to 30 years, including short-term Treasury bills, as well as fixed, floating rate and CPI linked securities, offered on the domestic primary market through auctions at market prices to Treasury securities dealers, and fixed and floating rate bonds sold through the national network of Customer Service Outlets (“CSOs”) to individuals at prices fixed by the issuer;

●	savings bonds, which are sold through the CSOs to individuals at nominal value, are not freely marketable and currently have maturities of up to ten years;

●	other debt (mainly free funds of public finance sector entities placed at the Ministry of Finance’s account as deposits).

At the end of February 2012, marketable Treasury securities constituted approximately 97.0 percent of domestic State Treasury debt.

The Ministry of Finance auctions Treasury bills at a discount from face value with maturities of up to 52 weeks.

External State Treasury Debt

At the end of February 2012, Poland had PLN 237.6 billion (U.S.$ 77.3 billion) of external State Treasury debt outstanding. Approximately 78.9 percent of this debt is in the form of sovereign bonds issued abroad. Other categories include loans from international financial institutions, Paris Club debt (which arose as a result of debt restructuring agreed with Poland’s creditors in 1991), Brady Bonds (issued as a result of commercial debt restructuring with the London Club in 1994) and matured payables. See “Paris Club and London Club Agreements”.

The following table sets forth details as to the outstanding principal amount of the State Treasury’s external debt as at the dates indicated:

	As at December 31,										As at February 29,
	2007		2008		2009		2010		2011		2012
	(U.S.$ millions)
Medium and Long Term Loans
Paris Club		4,323		1,071		114		103		79		76
Multilateral		7,455		8,440		11,994		13,115		14,841		15,868
EIB		5,356		6,505		7,314		7,544		8,865		9,639
The World Bank		1,681		1,574		4,346		5,291		5,744		5,988
EBRD		3		-		-		-		-		-
CEB		415		361		334		280		232		241
Other loans		77		141		69		64		52		43
Total loans		11,855		9,652		12,177		13,283		14,972		15,988
Bonds
Foreign bonds		37,345		40,566		46,738		52,153		56,843		61,029
Brady Bonds		542		341		297		297		297		297
Total bonds		37,887		40,906		47,035		52,450		57,185		61,326
Short Term Debt		7		61		0		0		0		0
Total State Treasury External Debt		49,749		50,620		59,212		65,733		72,113		77,314

____________

Source: Ministry of Finance

The following table presents the currency composition of the State Treasury’s external debt as at February 29, 2012:

	In millions of original currency		Equivalent in U.S.$ millions		%
EUR		38,899.2		52,361.4		67.7
U.S.$		13,982.6		13,982.6		18.1
Japanese yen		416,031.8		5,162.6		6.7
Swiss francs		5,200.0		5,807.1		7.5
Total				77,313.7		100.0

____________

Source: Ministry of Finance

Projected State Treasury External Debt Service Requirements

The following table presents debt service projections for the State Treasury’s medium and long term external debt by type of creditor for the years indicated. The data contained in the table does not assume any refinancing of existing debt.

	2012		2013		2014		2015		2016		2017		2018 and beyond
	(U.S.$ millions)
PRINCIPAL PAYMENTS		4,929		5,058		6,099		5,123		6,049		3,714		46,341
Loans		535		1,020		941		556		1,309		643		10,983
Paris Club		29		31		16
Multilateral		499		974		911		549		1,309		643		10,983
Other		7		14		14		7
Bonds		4,394		4,038		5,158		4,567		4,739		3,071		35,358
Brady Bonds														297
Foreign bonds		4,394		4,038		5,158		4,567		4,739		3,071		35,061
INTEREST PAYMENTS		2,032		2,963		2,718		2,483		2,292		2,087		10,334
Loans		433		450		413		387		353		315		1,579
Paris Club		2		1		0
Multilateral		430		448		412		387		353		315		1,579
Other		1		1		1		0
Bonds		1,599		2,513		2,305		2,096		1,939		1,772		8,756
Brady Bonds		13		13		13		15		15		15		104
Foreign bonds		1,586		2,500		2,292		2,081		1,925		1,757		8,652
TOTAL DEBT SERVICE		6,961		8,021		8,817		7,606		8,341		5,801		56,676
Loans		968		1,470		1,354		943		1,662		958		12,562
Paris Club		32		32		16		0		0		0		0
Multilateral		929		1,422		1,323		936		1,662		958		12,562
Other		8		15		15		7		0		0		0
Bonds		5,992		6,551		7,463		6,663		6,679		4,843		44,114
Brady Bonds		13		13		13		15		15		15		401
Foreign bonds		5,980		6,538		7,450		6,648		6,664		4,829		43,713

____________

Source: Ministry of Finance

Default

Poland is not currently in default in relation to any of its external creditors.

Paris Club and London Club Agreements

In 1990, the total external debt of Poland was approximately U.S.$ 48.5 billion. Most of this debt was incurred in the 1970s under central planning when foreign credits, both official and commercial, were used to finance Poland’s foreign trade deficit and as a means to postpone needed economic reforms. During the period between 1981 and 1994, Poland was in default with respect to certain debts to 17 creditor countries, known as the Paris Club, and more than 500 commercial bank creditors, known as the London Club. The interest in arrears varied from U.S.$ 25.0 million to U.S.$ 2.2 billion and the principal in arrears varied from U.S.$ 76.0 million to U.S.$ 4.1 billion. In 1991, Poland signed the Paris Club Agreement, encompassing all of Poland’s medium- and long-term official credits granted by Paris Club members before January 1984, amounting to approximately U.S.$ 33.0 billion. The agreement gave Poland a two-stage 50.0 percent debt reduction in net present value terms and U.S.$ 6.2 billion in total principal owed to Paris Club creditors was forgiven. In February 2005, Poland entered into an agreement with the Paris Club creditors allowing the early repayment of EUR 12.3 billion (approximately U.S.$ 16.2 billion) of this debt, subject to a bilateral agreement with each respective creditor nation. Ten countries accepted this offer (one only partially) and Poland repaid some EUR 4.45 billion in total. The early repayment achieved the principal goals of increasing the average maturity of the State Treasury’s external debt, thus bringing down the risk of refinancing

the liabilities and smoothing the repayment profile. Repayment was financed through the issuance of sovereign bonds with an average maturity of 17 years. The buyback also resulted in a decrease in the nominal level of debt, and some debt servicing cost savings, estimated at U.S.$ 100 million in 2005, U.S.$ 35 million in 2006 and further significant amounts in the following years. As at February 29, 2012, the only remaining Paris Club debt was approximately U.S.$ 76 million and this debt is currently expected to be paid in full in 2014 in accordance with its payment schedule.

In March 1994, after more than four years of negotiations, Poland and its London Club creditors agreed to the terms of a comprehensive reduction and restructuring of its external commercial debt, including all associated interest. This agreement reduced these liabilities by 49.2 percent in net present value terms, through forgiveness of interest, debt buy-backs and bond exchanges. Between 1997 and 2008, the Ministry of Finance completed a number of transactions to redeem its Brady Bonds. Between 2006 and 2009, the Ministry of Finance repurchased approximately U.S.$ 850.0 million in principal amount of Brady Bonds (U.S.$ 588.0 million in 2006, U.S.$ 63.0 million in 2007, U.S.$ 201.0 million in 2008 and U.S.$ 43.5 million in 2009). As a result of these transactions, the principal amount of the remaining Brady Bonds was reduced from approximately U.S.$ 8.0 billion at the end of 1994 to approximately U.S.$ 0.3 billion as at February 29, 2012.

State Treasury’s Contingent Liabilities

The following table sets out the contingent liabilities that arise from sureties and guarantees owed by the State Treasury:

	2009		2010		2011
	(PLN thousands)
Domestic sureties and guarantees		18,306,617.4		25,129,039.7		34,615,948.8
Foreign guarantees		30,580,332.7		48,071,657.8		59,687,770.1
Total State Treasury’s contingent liabilities		48,886,950.1		73,200,697.5		94,303,718.9

The increase in contingent liabilities in recent years resulted mainly from the guaranteed debt of BGK incurred for financing the investments of the National Road Fund (“NRF”). While at the end of 2009 guarantees of that type amounted to PLN 20,199 million of contingent liabilities, at the end of 2010 they amounted to PLN 39,868 million and at the end of 2011 the amount further increased to PLN 59,514 million.

Except from the above guarantees for debt incurred by BGK, there are also issued guarantees for pay-outs from NRF financing liabilities of concessionaires incurred for building motorways. Those guarantees amounted to PLN 15,470 million of contingent liabilities at the end of 2010 and increased to PLN 17,253 million at the end of 2011, compared to only PLN 8,430 million at the end of 2009.

TOTAL EXTERNAL DEBT

The following table provides details of Poland’s gross external debt, by obligor, as at the dates indicated. For this purpose, gross external debt refers to the amount, at any given time, of disbursed and outstanding contractual liabilities of Polish residents to repay the non-residents’ principal, with or without interest, or to pay interest, with or without principal, irrespective of the currency in which the liability is denominated.

External debt includes inter-company loans, current accounts and time deposits held by non-residents with Polish banks, debt securities held by non-resident portfolio investors, trade credits and other loans and credits (including financial leases), irrespective of currency.

Total external debt at the end of 2011 amounted to U.S.$ 321.9 billion. Short-term debt on original maturity basis accounted for 22.4 percent of the total external debt and was completely covered by official reserve assets. The main component of Polish external debt is the debt of the enterprise sector, comprising 42.1 percent of total external debt in 2011. The share of the general government sector in total external debt amounted to 35.8 percent in 2011.

The following table shows Poland’s external debt by obligor as at the dates indicated.

	As at December 31,
	2007		2008		2009		2010		2011
	(U.S.$ millions)
Monetary authorities		8,279		2,409		5,375		6,894		5,040
Other investment		8,279		2,409		5,375		6,894		5,040
Loans		-		-		-		-		-
Currency and deposits		8,278		2,409		3,295		4,827		3,013
Other liabilities		1		-		2,080		2,067		2,027
Central and local government		78,471		66,963		86,847		109,641		115,168
Debt securities		65,390		55,922		72,716		93,419		97,091
Bonds and notes		65,384		55,712		71,572		92,251		96,587
Money-market instruments		6		210		1,144		1,168		504
Other investment		13,081		11,041		14,131		16,222		18,077
Loans		13,081		11,041		14,131		16,167		18,052
Other liabilities		-		-		-		55		25
Banks		40,161		60,043		61,837		69,080		66,037
Loans from direct investors (Intercompany loans)		1,102		1,423		1,842		39		23
Debt securities		1,706		1,291		1,164		1,571		1,483
Bonds and notes		1,569		1,191		1,150		1,551		1,482
Money-market instruments		137		100		14		20		1
Other investment		37,353		57,329		58,831		67,470		64,531
Loans		20,817		31,149		30,733		33,971		33,774
Currency and deposits		16,536		26,180		28,052		31,517		29,328
Other liabilities		-		-		46		1,982		1,429
Other sectors		106,432		115,336		126,128		129,726		135,665
Loans from direct investors (Mainly intercompany loans)		46,958		48,628		54,049		70,221		73,666
Trade credits		13,332		12,552		13,001		15,479		15,180
Loans		33,626		36,076		41,048		54,742		58,486
Debt securities		4,842		4,595		5,432		1,222		1,433
Bonds and notes		4,464		4,209		5,318		1,219		1,344
Money-market instruments		378		386		114		3		89
Other investment		54,632		62,113		66,647		58,283		60,566
Trade credits		16,629		16,285		16,641		15,092		15,879
Loans		36,219		43,502		47,266		42,343		43,478
Other liabilities		1,784		2,326		2,740		848		1,209
TOTAL EXTERNAL DEBT		233,343		244,751		280,187		315,341		321,910
Of which:
- long-term		172,474		178,832		210,176		238,809		249,782
- short-term		60,869		65,919		70,011		76,532		72,128

___________

Source: NBP

DESCRIPTION OF THE SECURITIES

The debt securities (“Securities”), will be issued under a Fiscal Agency Agreement between the State Treasury, represented by the Minister of Finance, and a selected fiscal agent.

The following is a summary of certain terms of the Securities. The State Treasury will describe the particular terms of any Securities in the prospectus supplement relating to those Securities. The prospectus supplement may also add, update or change information combined in this prospectus. If the information in this prospectus differs from any subsequent prospectus supplement, you should rely on the updated information in the prospectus supplement. The particular terms of any Securities described in the prospectus supplement may include:

●	the principal amount of the Securities;

●	the price of the Securities;

●	the stated maturity date on which the State Treasury must repay the Securities;

●	the rate of interest the Securities will bear and, if variable, the method by which the interest rate will be calculated;

●	the dates when any interest payments will be made;

●	whether and in what circumstances the State Treasury may redeem the Securities before maturity;

●	the currency in which the State Treasury may pay the Securities and any interest; and

●	any other terms of the Securities.

Status of the Securities and Negative Pledge

The Securities will constitute general and unsecured obligations of Poland and the full faith and credit of Poland will be pledged for the due and punctual payment of the principal of, and interest on, the Securities and for the performance of all obligations of Poland with respect thereto. The Securities will rank pari passu among themselves and at least pari passu in right of payment with all other present and future unsecured obligations of Poland, except for such obligations as may be preferred by mandatory provisions of applicable law.

So long as any of the Securities remain outstanding, Poland will not create or permit (to the extent Poland has the power to refuse such permission) the creation of any Security Interest on any of its present or future assets or revenues, or any part thereof, to secure any Public External Indebtedness of Poland, unless Poland shall procure that all amounts payable under the Securities are secured equally and ratably.

Notwithstanding the above, Poland may create or permit the creation of:

(a)

any Security Interest which secures Poland’s U.S.$ 178.52 million Collateralized Par Bonds due 2024 and U.S.$ 118.49 million Collateralized RSTA Bonds due 2024 each issued (in part) on October 27, 1994 and which is either existing on the date hereof in relation to, or contemplated by the terms of, such bonds; or

(b)

any Security Interest upon property to secure Public External Indebtedness incurred for the purpose of financing the acquisition of such property (or property which forms part of a class of assets of a similar nature where the Security Interest is by reference to the constituents of such class from time to time); or

(c)	any Security Interest existing on property at the time of its acquisition; or

(d)	any Security Interest arising by operation of law which has not been foreclosed or otherwise enforced against the assets to which it applies; or

(e)

any Security Interest securing or providing for the payment of Public External Indebtedness incurred in connection with any Project Financing provided that such Security Interest applies only to properties which are the subject of such Project Financing or revenues or claims which arise from the operation, failure to meet specifications, exploitation, sale or loss of, or failure to complete, or damage to, such properties; or

(f)	the renewal or extension of any Security Interest described in subparagraphs (a) to (e) above, provided that the principal amount of the Public External Indebtedness secured thereby is not increased.

For these purposes:

“Person” means any individual, company, corporation, firm, partnership, joint venture, association, unincorporated organization, trust or any other juridical entity, including without limitation, a state or an agency of a state or other entity, whether or not having separate legal personality.

“Project Financing” means any arrangement for the provision of funds which are to be used solely to finance a project for the acquisition, construction, development or exploitation of any property pursuant to which the persons providing such funds agree that the principal source of repayment of such funds will be the project and the revenues (including insurance proceeds) generated by such project.

“Public External Indebtedness” means any obligation for borrowed money (a) evidenced by bonds, notes or other securities which are or may be quoted, listed or ordinarily purchased and sold on any stock exchange, automated trading system or over-the-counter or other securities market and (b) denominated or payable, or at the option of the holder thereof payable, in a currency other than the lawful currency of Poland.

“Security Interest” means any mortgage, charge, pledge, lien, security interest or other encumbrance securing any obligation of Poland or any other type of preferential arrangement having similar effect over any assets or revenues of Poland.

Payment of Additional Amounts

All payments made in respect of a Security, including payments of principal and interest, to a holder of a Security that is not a resident of Poland, will be made by the State Treasury without withholding or deducting for or on account of any present or future taxes, duties, levies or other governmental charges of whatever nature imposed or levied by Poland or any political subdivision or taxing authority within Poland. In the event the State Treasury is required by law to deduct or withhold any such taxes from your payments, the State Treasury will pay to you such additional amounts (“Additional Amounts”) as may be necessary so that the net amount that you receive (including any deduction or withholding with respect to Additional Amounts) is equal to the amount provided for in the Security to be paid to you in the absence of such deduction or withholding. You will not be paid any Additional Amounts, however, if the tax is:

●

a tax that would not have been imposed but for your present or former connection (or a connection of your fiduciary, settlor, beneficiary, member, shareholder or other related party) with Poland, including your (or your fiduciary, settlor, beneficiary, member, shareholder or other related party) being or having been a citizen or resident of Poland or being or having been engaged in a trade or business or present in Poland or having, or having had, a permanent establishment in Poland;

●	imposed because you present a Security in definitive form for payment more than 30 days after the date on which the payment became due and payable;

●	an estate, inheritance, gift, sales, transfer or personal property tax or any similar tax, assessment or governmental charge;

●	a tax, assessment or other governmental charge which is payable other than by withholding;

●

a tax that would not have been imposed but for the failure to comply with certification, information or other reporting requirements concerning your nationality, residence or identity (or the nationality, residence or identity of the beneficial owner of the Security), if your compliance is required by the laws of Poland or of any political subdivision or taxing authority of Poland to avoid or reduce such tax;

●	required to be withheld by any paying agent from a payment on the Security to the extent that such payment can be made without withholding by another paying agent;

●

a tax, assessment or other governmental charge which is required to be withheld or deducted where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to the EU Directive on the Taxation of Savings Income (Directive 2003/48/EC), or any law implementing or complying with, or introduced in order to conform to, such directive; or

●	imposed as a result of any combination of the items listed above.

Furthermore, no Additional Amounts will be paid with respect to any Security to a holder who is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent that the settlors with respect to such fiduciary, partner or beneficial owner, as the case may be, would not have been entitled to payment of such Additional Amounts if they held the Security themselves.

In the event that such deduction or withholding is required, the State Treasury will make such deduction or withholding and remit the full amount deducted or withheld to the relevant authority in accordance with applicable law. The State Treasury will furnish you, upon request, within a reasonable period of time after the date of the payment of any taxes due pursuant to applicable law, certified copies of tax receipts evidencing such payment by the State Treasury.

Any reference herein to principal or interest on the Securities includes any Additional Amounts which may be payable on those Securities.

General

Any monies held by the fiscal agent in respect of any Securities and remaining unclaimed for two years after those amounts have become due and payable will be returned by the fiscal agent to the State Treasury. The holders of those Securities may thereafter look only to the State Treasury for any payment. Securities will become void unless holders present them payment within five years after their maturity date.

The State Treasury may replace the fiscal agent at any time, subject to the appointment of a replacement fiscal agent. The fiscal agent will not be a trustee for the holders of the Securities and will not have the same responsibilities or duties to act for such holders as would a trustee. The State Treasury may maintain deposit accounts and conduct other banking transactions in the ordinary course of business with the fiscal agent.

Default; Acceleration of Maturity

If one or more of the following events shall have occurred and be continuing:

●	the State Treasury fails to pay any interest on any Securities when due and such failure continues for a period of 30 days from the date due for payment thereof; or

●	the State Treasury fails duly to perform or observe any of its other material obligations under or in respect of the Securities, which failure continues unremedied for 45 days after written

notice thereof has been delivered by any Securityholder to the State Treasury at the specified office of the fiscal agent;

the fiscal agent shall, upon receipt of written requests to the State Treasury at the specified office of the fiscal agent from holders of not less than 25 percent in aggregate outstanding principal amount of the Securities, declare the Securities due and payable, in each case at their principal amount together with accrued interest without further formality. Upon such declaration by the fiscal agent, the fiscal agent shall give notice thereof in the manner provided in the Fiscal Agency Agreement to the State Treasury and to the holders of the Securities in accordance with such Agreement.

After such declaration, if all amounts then due with respect to the Securities are paid (other than amounts due solely because of such declaration) and all other defaults with respect to the Securities are cured, such declaration may be annulled and rescinded by holders of not less than 50 percent in aggregate outstanding principal amount of the Securities, the “Required Percentage”, by a written notice thereof to the State Treasury at the specified office of the fiscal agent or by the passing of a resolution by the holders of not less than the Required Percentage.

Meeting of Holders of Debt Securities; Modification

The Fiscal Agency Agreement contains provisions for convening meetings of Securityholders in a given series to consider matters relating to the Securities in that series, including, without limitation, the modification of any provision of the terms of the Securities in that series. Any such modification may be made if, having been approved in writing by the State Treasury, it is sanctioned by an Extraordinary Resolution. Such a meeting may be convened by the State Treasury and shall be convened by the fiscal agent upon the request in writing of Securityholders holding not less than 10 percent of the aggregate principal amount of the outstanding Securities in the given series.

As provided below, certain terms, including payment terms and other material terms defined below as Reserved Matters, can be modified without your consent, as long as a supermajority of the Securityholders (namely, one or more persons holding or representing at least 75 percent of the aggregate principal amount of the outstanding Securities in that series) agrees to the change.

The quorum at any meeting of Securityholders convened to vote on an Extraordinary Resolution will be one or more persons present and holding or representing at least 50 percent of the aggregate principal amount of the outstanding Securities in the given series or, at any adjourned meeting of Securityholders, one or more persons present and holding or representing at least 25 percent of the aggregate principal amount of the outstanding Securities in a given series; provided, however, that any proposals relating to a Reserved Matter may only be approved by an Extraordinary Resolution passed at a meeting of Securityholders at which one or more persons holding or representing at least 75 percent of the aggregate principal amount of the outstanding Securities in that series are present. For these purposes, the holder of a Global Security shall be treated as two persons. Any Extraordinary Resolution duly passed at any such meeting shall be binding on all the Securityholders, whether present or not.

A resolution may be in writing and any such resolution may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Securityholders.

For these purposes:

“Extraordinary Resolution” means:

●	in relation to any Reserved Matter:

●

a resolution passed at a meeting of Securityholders duly convened and held in accordance with the Fiscal Agency Agreement by 75 percent of the aggregate principal amount of all outstanding Securities in the given series; or

●

a resolution in writing signed by or on behalf of Securityholders of not less than 75 percent of the aggregate principal amount of all outstanding Securities in the given series; and

●	in relation to any other matter:

●

a resolution passed at a meeting of Securityholders duly convened and held in accordance with the Fiscal Agency Agreement by a majority consisting of not less than 66⅔ percent of the aggregate principal amount of the outstanding Securities in the given series which are represented at that meeting; or

●

a resolution in writing signed by or on behalf of Securityholders of not less than 66⅔ percent of the aggregate principal amount of all outstanding Securities in the given series.

“Reserved Matter” means any proposal to:

●	change the due date for the payment of the principal of, or any installment or interest on, the Securities;

●	reduce the principal amount of the Securities;

●	reduce the portion of the principal amount that is payable in the event of an acceleration of the maturity of the Securities;

●	reduce the interest rate on any Security or any premium payable upon redemption of the Securities;

●

modify any provision of the terms and conditions of the Securities in connection with any exchange or substitution of the Securities, or the conversion of the Securities into, any other obligations or securities of the State Treasury or any other person, which would result in the terms and conditions of the Securities as so modified being less favorable to the holders of the Securities which are the subject of the terms and conditions as so modified than:

(a)

the provisions of the other obligations or securities of the State Treasury or any other person resulting from the relevant exchange or substitution; or

(b)

if more than one series of other obligations or securities results from the relevant exchange or substitution or conversion, the provisions of the resulting series having the largest aggregate principal amount;

●	change the currency in which any amount in respect of the Securities is payable;

●	shorten the period during which the State Treasury is not permitted to redeem the Securities or permit the State Treasury to redeem the Securities if, prior to such action, the State Treasury is not permitted to do so;

●	change the definition of “outstanding” with respect to the Securities;

●	change the governing law of the Securities;

●

change the courts to the jurisdiction of which the State Treasury has submitted, the State Treasury’s obligation under the Fiscal Agency Agreement or the terms and conditions of the Securities to appoint and maintain an agent for the service of process or the State Treasury’s waiver of immunity with respect to any suit, action or proceeding that may be brought in connection with the Securities or the Fiscal Agency Agreement;

●	reduce the proportion of the principal amount of the Securities that is required to constitute a quorum or for any request, demand, authorization, direction, notice, consent, waiver or other

action or that is required to modify, amend or supplement the Fiscal Agency Agreement or the terms and conditions of the Securities; or

●	change the obligation of the State Treasury to pay Additional Amounts on the Securities.

Any modification, amendment or supplement made in accordance with the terms of the Securities will be binding on all holders of Securities of that series.

The State Treasury and the fiscal agent may, without the consent of any holder of the Securities of a series, modify, amend or supplement the Fiscal Agency Agreement or the Securities of that series for the purpose of:

●	adding to the covenants of the State Treasury;

●	surrendering any right or power conferred upon the State Treasury;

●	securing the Securities of that series;

●	curing any ambiguity, or curing, correcting or supplementing any defective provision contained in the Fiscal Agency Agreement or in the Securities of any series; or

●	amending the Fiscal Agency Agreement or the Securities of that series in any manner that the State Treasury and the fiscal agent may determine and that does not adversely affect the interest of any holder of Securities of that series in any material respect.

The State Treasury may from time to time, without notice to or the consent of the registered holders of any series of Securities, issue further Securities which will form a single series of Securities, provided the further Securities are fungible with the Securities of the existing series for U.S. federal income tax purposes. These further Securities will have the same terms as to status, redemption or otherwise as the Securities of the existing series and will rank equally with the Securities of the existing series in all respects, except for the payment of interest accruing prior to the issue date of these further Securities or except for the first payment of interest following the issue date of these further Securities.

Purchase of Securities by the State Treasury

The State Treasury may at any time purchase any Securities through the market or by tender at any price. If purchases are made by tender, tenders must be available to all holders of Securities of the same series. Any Securities purchased by or on behalf of the State Treasury may be held, resold or cancelled.

Form and Settlement

If specified in a prospectus supplement, the State Treasury will issue the Securities of each series as one or more fully registered global securities (each a “Global Security”), which will be deposited with, or on behalf of, The Depository Trust Company, New York (“DTC”), and/or one or more other depositaries named in the prospectus supplement, such as Euroclear Bank S.A./N.V. (“Euroclear”), or Clearstream Banking, sociéte anonyme (“Clearstream”). Except as set forth below, the Global Securities may be transferred, in whole and not in part, only to DTC or its nominee.

DTC is a limited-purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities of its participants and facilitates the clearance and settlement of securities transactions through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of securities certificates. DTC’s participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own DTC. Access to DTC’s book-entry system is also available to others, such as banks, brokers, dealers and

trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. The rules that apply to DTC are on file with the SEC and the DTC agrees and represents to its participants that it will administer its book-entry system in accordance with its rules and requirements of law.

Upon the issuance of the Global Securities, the State Treasury expects that the depositary or nominee will credit, on its book-entry registration and transfer system, the respective principal amounts of the Securities represented by the Global Securities to the accounts of institutions that have accounts with the depositary or nominee, known as the participants. Ownership of beneficial interests in a Global Security will be limited to participants or persons that may hold interests through participants. Ownership of beneficial interests in a Global Security will be shown on, and the transfer of that ownership will be effected only through, records maintained by the depositary or its nominee (with respect to interests of participants) and on the records of participants (with respect to interests of persons other than participants). The laws of some states require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limitations may impair the ability to own, transfer or pledge beneficial interests in a Global Security.

The State Treasury will provide the fiscal agent with any payment of principal or interest due on the Securities on any interest payment date or at maturity. As soon as possible thereafter, the fiscal agent will make such payments to the depositary or nominee that is the registered owner of the Global Security representing such Securities in accordance with arrangements between the fiscal agent and the depositary. The State Treasury expects that the depositary or nominee, upon receipt of any payment of principal or interest, will credit immediately participants’ accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the Global Security as shown on the relevant records. The State Treasury also expects that payments by participants to owners of beneficial interests in the Global Security will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in “street name”, and will be the responsibility of such participants. Neither the State Treasury nor the fiscal agent will have any responsibility or liability for payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records.

So long as a depositary or nominee is the registered owner of a Global Security, it will be considered the sole owner and holder of the Securities represented by such Global Security. Except as provided below or in a prospectus supplement, owners of beneficial interests in a Global Security:

●	will not be entitled to have the Securities represented by such Global Security registered in their names;

●	will not receive or be entitled to receive physical delivery of Securities in definitive form upon exchange or otherwise; and

●	will not be considered the owners or holders of any Securities represented by such Global Security.

Accordingly, such person owning a beneficial interest in a Global Security must rely on the procedures of the depositary and, if such person is not a participant, on the procedures of the participant through which such person owns its interest, to exercise any rights of a holder of Securities. Under existing industry practice, if an owner of a beneficial interest in a Global Security desires to take any action that the depositary or its nominee, as the holder of the Global Security, would be entitled to take, the depositary would authorize the participants to take such action, and the participants would authorize beneficial owners to take such action or would otherwise act upon the instructions of beneficial owners.

Unless stated otherwise in a prospectus supplement, a Global Security may only be transferred as a whole in the following manner:

●	by the related depositary to a nominee of such depositary or by a nominee of such depositary to such depositary or any other nominee of such depositary; or

●	by such depositary or any such nominee to another depositary for such Securities or its nominee or to a successor of the depositary or a nominee of such successor.

Securities represented by a Global Security are exchangeable for Securities in definitive form in denominations specified in the applicable prospectus supplement if:

●

the depositary, or each of Euroclear and Clearstream, notifies the State Treasury that it is unwilling or unable to continue as depositary for such Global Security or if the depositary ceases to be a clearing agency registered under applicable law and a replacement depositary is not appointed within 90 days;

●	the State Treasury decides not to have all of the related Securities represented by such Global Security;

●	an Event of Default has occurred and is continuing; or

●	such other events occur as may be specified in a prospectus supplement.

Any Security that is exchangeable pursuant to the preceding sentence is exchangeable for Securities in definitive form registered in such names as the depositary shall direct. Securities in definitive form may be presented for registration of transfer or exchange at the office of the fiscal agent in The City of New York and principal thereof and interest thereon will be payable at such office of the fiscal agent, provided that interest thereon may be paid by check mailed to the registered holders of the Securities. Subject to the foregoing, a Global Security is not exchangeable, except for a Global Security or Global Securities of the same aggregate denominations to be registered in the name of the depositary or its nominee.

Prescription

The Securities will be subject to the limitation periods relating to claims for principal and interest as provided by Article 118 of the Polish Civil Code, dated April 23, 1964, as amended, which provides a ten-year limitation period on claims for principal and a three-year limitation period on claims for interest.

Judgment Currency

The State Treasury agrees that if a judgment or order given or made by any court for the payment of any amount in respect of any Security is expressed in a currency, the judgment currency, other than the U.S. dollar, the denomination currency, the State Treasury will pay any deficiency arising or resulting from any variation in rates of exchange between the date as at which the amount in the denomination currency is notionally converted into the amount in the judgment currency for the purposes of such judgment or order and the date of actual payment thereof. This obligation will constitute a separate and independent obligation from the other obligations under the Securities, will give rise to a separate and independent cause of action, will apply irrespective of any waiver or extension granted from time to time and will continue in full force and effect notwithstanding any judgment or order for a liquidated sum or sums in respect of amounts due in respect of the relevant Security or under any such judgment or order for a liquidated sum or sums in respect of amounts due in respect of the relevant Security or under any such judgment or order.

Governing Law; Consent to Service; Sovereign Immunity

The Fiscal Agency Agreement and the Securities will be governed by and interpreted in accordance with the laws of the State of New York without regard to any conflicts of laws principles thereof that

would require the application of the laws of a jurisdiction other than the State of New York, except that all matters governing the authorization and execution of the Securities by the State Treasury will be governed by the laws of Poland. The State Treasury will appoint the Consul General of the Republic of Poland, 233 Madison Avenue, New York, NY 10016 as its authorized agent upon which process may be served in any action arising out of or based on the Securities which may be instituted in any State or federal court in New York City by any holder of a Security. Poland will irrevocably waive to the fullest extent permitted by law any immunity from jurisdiction to which it might otherwise be entitled in any action (other than a pre-judgment attachment which is expressly not waived) arising out of or based on the Securities which may be instituted by any holder of a Security in any State or federal court in New York City or in any competent court in Poland, except for its sovereign immunity in connection with any actions arising out of or based on U.S. federal or state securities laws as further described below. Such waiver of immunities constitutes only a limited and specific waiver for the purposes of the Securities and under no circumstances shall it be interpreted as a general waiver by Poland or a waiver with respect to proceedings unrelated to the Securities. However, the United States Foreign Sovereign Immunities Act of 1976 (the “Immunities Act”), may provide an effective means of service and preclude granting sovereign immunity in such actions.

The Immunities Act may also provide a means for limited execution upon such property of Poland in the United States as is related to the service or administration of the Securities. Under the laws of Poland, subject to certain exceptions, assets of Poland are immune from attachment or other forms of execution whether before or after judgment. Poland does not waive any immunity in respect of property which is ambassadorial or consular property or buildings or the contents thereof, in each case situated outside Poland, or any bank accounts of such embassies or consulates, in each case necessary for proper ambassadorial and consular functions, or any military property or assets of Poland nor does it waive immunity from execution or attachment or process in the nature thereof.

Poland reserves the right to plead sovereign immunity under the Immunities Act with respect to actions brought against it under U.S. federal securities laws or any State securities laws. In the absence of a waiver of immunity by Poland with respect to such actions, it would not be possible to obtain a U.S. judgment in such an action against Poland unless a court were to determine that Poland is not entitled under the Immunities Act to sovereign immunity with respect to such action.

ENFORCEABILITY OF JUDGMENTS

Poland is a foreign sovereign State. Consequently, it may be difficult for investors to obtain or realize upon judgments of courts in the United States against Poland. The State Treasury will irrevocably submit to the jurisdiction of the federal and state courts in New York City, and will irrevocably waive any immunity from the jurisdiction (including sovereign immunity but not all immunity from execution or attachment or process in the nature thereof) of such courts and any objection to venue, in connection with any action arising out of or based upon the Securities brought by any holder of Securities.

Poland reserves the right to plead sovereign immunity under the Immunities Act with respect to actions brought against it under U.S. federal securities laws or any state securities laws. In the absence of a waiver of immunity by Poland with respect to such action, it would not be possible to obtain a U.S. judgment in such an action against Poland unless a court were to determine that Poland is not entitled under the Immunities Act to sovereign immunity with respect to such action. The State Treasury has been advised by White & Case, W. Daniłowicz, W. Jurcewicz i Wspólnicy - Kancelaria Prawna Spółka Komandytowa, Polish counsel for the State Treasury, that enforceability in Poland of final judgments of U.S. courts, including those obtained in actions predicated upon the civil liability provisions of the U.S. federal securities laws, will be subject to the rules governing enforcement in Poland of civil judgments of foreign courts specified in the Polish Code of Civil Procedure.

Foreign court judgments are recognizable under Article 1145 of the Polish Code of Civil Procedure (Kodeks postępowania cywilnego) and are enforceable in Poland under Article 1150 of the Polish Code of Civil Procedure unless they fail to satisfy the requirements listed in Article 1146 of the Polish Code of Civil Procedure or they are not enforceable in the country of their origin, with the exception of foreign court judgments that were issued in the countries with which Poland is bound by a relevant international treaty (bilateral or multilateral) and such treaty waives the application of the relevant provisions of the Polish Code of Civil Procedure.

Pursuant to Article 1145 of the Polish Code of Civil Procedure, judgments of foreign courts issued in civil cases are automatically recognized in Poland by operation of law unless there exists an exception as set forth in Article 1146 of the Code of Civil Procedure.

Pursuant to Article 1146, Section 1 of the Polish Code of Civil Procedure, a judgment issued by a foreign court will not be recognized, if:

(i)	it is not legally valid in the state where it was issued;

(ii)	it was issued in a case being under the exclusive jurisdiction of Polish courts;

(iii)

the defendant, who was not in dispute as to the essence of the case, has not received, duly and at a time making it possible to undertake defense, the letter starting the proceedings;

(iv)	a party was deprived of the possibility to defend itself in the course of proceedings;

(v)	a case for the same claim between the same parties was pending in Poland earlier than before the foreign court;

(vi)	it is contrary to an earlier legally valid judgment of a Polish court or an earlier legally valid judgment of a foreign court complying with the conditions of its recognition in Poland issued in a case for the same claim between the same parties; or

(vii)

recognition would be contrary to the basic principles of legal order in Poland.

Reciprocity in the recognition of judgments between Poland and the foreign court’s country is no longer necessary.

Recognition does not automatically bring about enforcement. In order for a foreign judgment to be declared enforceable in Poland, it has to be enforceable in the country of its origin and should not fall

under the conditions for the refusal of recognition set out in Article 1146 of the Polish Code of Civil Procedure.

Subject to the above, if all the relevant conditions are met, the enforceability in Poland of final judgments of U.S. courts would not require retrial in Poland. In addition, Polish law contains specific rules regarding the recognition and execution of judgments against assets of Poland.

In original actions brought before Polish courts, there is doubt as to the enforceability of liabilities based on the U.S. federal securities laws.

The State Treasury has appointed an authorized agent in New York City upon which service of process can be made. As a result of the State Treasury’s appointment of such agent in New York City, investors will be able to effect service of process upon Poland in original actions in Federal and state courts in New York City (subject to the preceding paragraphs). Regardless of the validity of such service of process under New York law, enforceability in Poland of final judgments of New York courts remains subject as described above. To commence original actions in Polish courts, service of process upon the State Treasury’s New York agent will not suffice, and valid service of process must be made under Polish law. Under Polish law, service of process is effected by delivery of the claim to the circuit court (Sad Okręgowy) and such court is responsible for service upon the defendant.

TAXATION

Information regarding Polish, United States federal income and certain other taxation matters will be included in the relevant prospectus supplement.

PLAN OF DISTRIBUTION

This summary plan of distribution will be supplemented by a description of the particular offering and its terms and conditions in a prospectus supplement issued for each series of Securities.

The State Treasury may sell Securities to or through underwriters. The State Treasury may also sell Securities directly to other purchasers or through agents. These firms may also act as agents. Only agents or underwriters named in the prospectus supplement are deemed to be agents or underwriters in connection with the Securities offered by the prospectus supplement.

The Securities may be distributed from time to time in one or more transactions:

●	at a fixed price or prices which the State Treasury may change;

●	at market prices prevailing at the time of sale;

●	at prices related to prevailing market prices; or

●	at negotiated prices.

In connection with the sale of Securities, the State Treasury may pay compensation to underwriters. Underwriters who act as agents for purchasers of securities may also receive compensation from the purchasers in the form of discounts, concessions or commissions. Underwriters may sell securities to or through dealers. The dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of Securities may be deemed to be underwriters under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Any discount or commissions received by underwriters, dealers and agents from the State Treasury and any profit on the resale of Securities by them may be deemed to be underwriting discounts and commissions. The State Treasury will identify any underwriter or agent, and describe any compensation received from us in the prospectus supplement.

The Securities may be a new issue of Securities with no established trading market. Underwriters and agents that the State Treasury sells Securities to for public offering and sale may make a market in the Securities. However, the underwriters and agents will not be obligated to make a market in the securities and may discontinue any market making at any time without notice. The State Treasury cannot assure you that there will be a liquid trading market for the Securities.

The State Treasury may enter into agreements with underwriters, dealers and agents who participate in the distribution of Securities. These agreements may entitle the underwriters, dealers and agents to indemnification by the State Treasury against certain liabilities, including liabilities under the Securities Act.

The State Treasury may authorize underwriters or other persons acting as their agents to solicit offers by institutions to purchase Securities from the State Treasury under contracts which provide for payment and delivery on a future date. The State Treasury will describe these arrangements in the prospectus supplement. The underwriters may enter into these contracts with commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and other institutions. The State Treasury must approve the institutions in all cases. The obligations of any purchaser under any of these contracts will be subject to the condition that the purchase of the Securities shall not at the time of delivery be prohibited under the laws of the jurisdiction to which such purchaser is subject. The underwriters and other agents will not have any responsibility in connection with the validity or performance of these contracts.

VALIDITY OF THE SECURITIES

Except as may otherwise be indicated in any prospectus supplement, the validity of each series of Securities will be passed upon on behalf of the State Treasury by or on behalf of the Director of the Legal Department, Ministry of Finance, ul. Swiętokrzyska 12, Warsaw, Poland and, as to U.S. and New York State law, by White & Case LLP, 5 Old Broad Street, London EC2N 1DW, England, United States counsel for the State Treasury, and, as to Polish law, by White & Case W. Daniłowicz, W. Jurcewicz i Wspólnicy - Kancelaria Prawna Spółka Komandytowa, Królewska Center, ul. Marszałkowska 142, 00-061 Warsaw, Poland, Polish counsel for the State Treasury. Certain legal matters will be passed upon for any underwriters by counsel identified in the related prospectus supplement. All statements in this prospectus or any prospectus supplement hereto, with respect to matters of Polish law have been passed upon by the Director of the Legal Department, Ministry of Finance, Republic of Poland and are made upon his authority.

AUTHORIZED AGENT IN THE UNITED STATES

The authorized agent of the State Treasury in the United States is the Consul General of the Republic of Poland, 233 Madison Avenue, New York, NY 10016.

OFFICIAL STATEMENTS AND DOCUMENTS

Information included herein which is identified as being derived from a publication of or supplied by Poland or one of its agencies or instrumentalities is included herein on the authority of such publication as a public official document of Poland. All other information herein and in the Registration Statement of which this prospectus is a part, other than included under the caption “Plan of Distribution” herein, is included as a public official statement made on the authority of Jan Vincent-Rostowski, Minister of Finance of the Ministry of Finance.

FURTHER INFORMATION

The information set forth herein relating to Poland has been reviewed by Jan Vincent-Rostowski, Minister of Finance of the Ministry of Finance, and is included herein on his authority.

The information for which the National Bank of Poland has been cited as the source was provided by the National Bank of Poland. The information for which the Central Statistical Office is cited as the source was provided by the Central Statistical Office of Poland and the information for which the Polish Agency for Foreign Investment is cited as the source was provided by the Polish Agency for Foreign Investment of Poland.

A registration statement, as it may be amended from time to time, relating to the Securities on file at the SEC, contains further information. The SEC maintains an internet site (http://www.sec.gov) that contains reports and other information regarding issuers that file electronically with the SEC.

INDEX TO TABLES AND SUPPLEMENTARY INFORMATION

	Page
State Treasury Internal Debt as at December 31, 2011
Marketable Treasury bonds with a maturity at issuance of more than a year	T-2
Retail Treasury bonds with a maturity at issuance of more than a year	T-3
State Treasury External Debt as at December 31, 2011 with a maturity at issuance of more than a year	T-6
State Guarantees and Sureties as at December 31, 2011 with a maturity at issuance of more than a year	T-8

T-1

State Treasury Internal Debt

Marketable Treasury bonds with a maturity at issuance of more than one year

As at December 31, 2011
Series Short Name	Issuance Date	Maturity Date	ISIN Code	Principal Amount (PLN)				Interest Rate (%)
				Issued		Outstanding

WZ0115	02/18/2011	01/25/2015	PL0000106480		19,255,452,000		19,255,452,000	Floating
WZ0118	02/16/2007	01/25/2018	PL0000104717		27,271,643,000		27,271,643,000	Floating
WZ0121	03/19/2010	01/25/2021	PL0000106068		16,056,967,000		16,056,967,000	Floating
Total					62,584,062,000		62,584,062,000
PP1013	03/17/2004	10/24/2013	PL0000103370		750,000,000		750,000,000	Floating

OK0112	06/05/2009	01/25/2012	PL0000105730		24,406,236,000		12,531,766,000		0.00
OK0712	11/13/2009	07/25/2012	PL0000105912		26,508,920,000		24,777,634,000		0.00
OK1012	04/09/2010	10/25/2012	PL0000106100		26,749,000,000		26,749,000,000		0.00
OK0113	10/08/2010	01/25/2013	PL0000106324		23,096,000,000		23,096,000,000		0.00
OK0713	04/15/2011	07/25/2013	PL0000106563		13,392,618,000		13,392,618,000		0.00
OK0114	08/12/2011	01/25/2014	PL0000106712		8,238,433,000		8,238,433,000		0.00
Total					122,391,207,000		108,785,451,000
PS0412	01/19/2007	04/25/2012	PL0000104659		27,469,388,000		24,206,212,000		4.75
PS0413	11/23/2007	04/25/2013	PL0000105037		21,860,011,000		21,860,011,000		5.25
PS0414	10/03/2008	04/25/2014	PL0000105433		29,570,737,000		29,570,737,000		5.75
PS0415	12/04/2009	04/25/2015	PL0000105953		29,324,002,000		29,324,002,000		5.50
PS0416	10/15/2010	04/25/2016	PL0000106340		23,768,304,000		23,768,304,000		5.00
PS1016	10/25/2011	10/25/2016	PL0000106795		6,832,586,000		6,832,586,000		4.75
Total					138,825,028,000		135,561,852,000
DS1013	10/24/2002	10/24/2013	PL0000102836		23,369,738,000		23,369,738,000		5.00
DS1015	10/24/2004	10/24/2015	PL0000103602		27,133,636,000		27,133,636,000		6.25
DS1017	10/25/2006	10/25/2017	PL0000104543		26,402,931,000		26,402,931,000		5.25
DS1019	10/25/2008	10/25/2019	PL0000105441		25,921,531,000		25,921,531,000		5.50
DS1020	04/16/2010	10/25/2020	PL0000106126		23,370,142,000		23,370,142,000		5.25
DS1021	07/25/2011	10/25/2021	PL0000106670		6,952,762,000		6,952,762,000		5.75
Total					133,150,740,000		133,150,740,000
WS0922	04/22/2002	09/23/2022	PL0000102646		25,297,743,000		25,297,743,000		5.75
WS0429	09/12/2008	04/25/2029	PL0000105391		6,730,246,000		6,730,246,000		5.75
WS0437	06/15/2007	04/25/2037	PL0000104857		1,387,200,000		1,387,200,000		5.00
Total					33,415,189,000		33,415,189,000
IZ0816 (1)	08/24/2004	08/24/2016	PL0000103529		12,290,679,000		11,470,679,000		3.00
IZ0823 (1)	08/25/2008	08/25/2023	PL0000105359		5,933,477,000		5,933,477,000		2.75
Total					18,224,156,000		17,404,156,000

___________

(1)	Issued and outstanding amounts in case of IZ series are presented at initial face value.

Source: Ministry of Finance

T-2

State Treasury Internal Debt

Retail Treasury bonds with a maturity at issuance of more than one year

As at December 31, 2011
Series No.	Issue Date	Maturity Date(1)	Issued		Outstanding		Interest Rate
			(PLN millions)
TZ0212	01/02/2009	01/02/2012		500.0		65.2	Floating
TZ0512	02/05/2009	02/05/2012		500.0		34.5	Floating
TZ0812	01/08/2009	01/08/2012		500.0		34.6	Floating
TZ1112	02/11/2009	02/11/2012		500.0		34.2	Floating
TZ0213	01/02/2010	01/02/2013		500.0		26.7	Floating
TZ0513	02/05/2010	02/05/2013		500.0		23.6	Floating
TZ0813	01/08/2010	01/08/2013		500.0		38.9	Floating
TZ1113	02/11/2010	02/11/2013		500.0		45.0	Floating
TZ0214	01/02/2011	01/02/2014		500.0		58.1	Floating
TZ0514	02/05/2011	02/05/2014		500.0		57.5	Floating
TZ0814	01/08/2011	01/08/2014		500.0		97.4	Floating
TZ1114	02/11/2011	02/11/2014		500.0		74.6	Floating
Total				6,000.0		590.2
COI0112	01/01/2008	4 years from date of purchase		100.0		82.8	Floating
COI0212	01/02/2008	4 years from date of purchase		200.0		29.7	Floating
COI0312	01/03/2008	4 years from date of purchase		200.0		28.7	Floating
COI0412	01/04/2008	4 years from date of purchase		200.0		61.5	Floating
COI0512	01/05/2008	4 years from date of purchase		200.0		27.5	Floating
COI0612	01/06/2008	4 years from date of purchase		200.0		33.5	Floating
COI0712	01/07/2008	4 years from date of purchase		200.0		75.7	Floating
COI0812	01/08/2008	4 years from date of purchase		200.0		66.6	Floating
COI0912	01/09/2008	4 years from date of purchase		200.0		61.4	Floating
COI1012	01/10/2008	4 years from date of purchase		200.0		99.4	Floating
COI1112	01/11/2008	4 years from date of purchase		500.0		55.6	Floating
COI1212	01/12/2008	4 years from date of purchase		500.0		46.8	Floating
COI0113	01/01/2009	4 years from date of purchase		500.0		21.6	Floating
COI0213	01/02/2009	4 years from date of purchase		500.0		22.0	Floating
COI0313	01/03/2009	4 years from date of purchase		500.0		60.8	Floating
COI0413	01/04/2009	4 years from date of purchase		500.0		41.3	Floating
COI0513	01/05/2009	4 years from date of purchase		500.0		45.1	Floating
COI0613	01/06/2009	4 years from date of purchase		500.0		54.8	Floating
COI0713	01/07/2009	4 years from date of purchase		500.0		37.2	Floating
COI0813	01/08/2009	4 years from date of purchase		500.0		22.8	Floating
COI0913	01/09/2009	4 years from date of purchase		500.0		38.9	Floating
COI1013	01/10/2009	4 years from date of purchase		500.0		32.9	Floating
COI1113	01/11/2009	4 years from date of purchase		500.0		31.2	Floating
COI1213	01/12/2009	4 years from date of purchase		500.0		42.4	Floating
COI0114	01/01/2010	4 years from date of purchase		500.0		31.0	Floating
COI0214	01/02/2010	4 years from date of purchase		500.0		42.4	Floating
COI0314	01/03/2010	4 years from date of purchase		500.0		39.5	Floating
COI0414	01/04/2010	4 years from date of purchase		500.0		15.1	Floating
COI0514	01/05/2010	4 years from date of purchase		500.0		15.1	Floating
COI0614	01/06/2010	4 years from date of purchase		500.0		15.0	Floating
COI0714	01/07/2010	4 years from date of purchase		500.0		13.3	Floating
COI0814	01/08/2010	4 years from date of purchase		500.0		24.1	Floating
COI0914	01/09/2010	4 years from date of purchase		500.0		15.6	Floating
COI1014	01/10/2010	4 years from date of purchase		500.0		15.1	Floating
COI1114	01/11/2010	4 years from date of purchase		500.0		28.9	Floating
COI1214	01/12/2010	4 years from date of purchase		500.0		20.2	Floating
COI0115	01/01/2011	4 years from date of purchase		500.0		10.4	Floating
COI0215	01/02/2011	4 years from date of purchase		500.0		34.6	Floating
COI0315	01/03/2011	4 years from date of purchase		500.0		29.8	Floating
COI0415	01/04/2011	4 years from date of purchase		500.0		26.3	Floating
COI0515	01/05/2011	4 years from date of purchase		500.0		42.7	Floating
COI0615	01/06/2011	4 years from date of purchase		500.0		25.0	Floating
COI0715	01/07/2011	4 years from date of purchase		500.0		31.1	Floating
COI0815	01/08/2011	4 years from date of purchase		500.0		54.2	Floating
COI0915	01/09/2011	4 years from date of purchase		500.0		52.8	Floating
COI1015	01/10/2011	4 years from date of purchase		500.0		26.9	Floating
COI1115	01/11/2011	4 years from date of purchase		500.0		28.9	Floating
COI1215	01/12/2011	4 years from date of purchase		500.0		40.2	Floating
Total				20,900.0		1,798.4
EDO1014	01/10/2004	10 years from date of purchase		100.0		5.0	Floating
EDO1114	01/11/2004	10 years from date of purchase		100.0		9.3	Floating
EDO1214	01/12/2004	10 years from date of purchase		100.0		27.0	Floating
EDO0115	03/01/2005	10 years from date of purchase		100.0		9.7	Floating
EDO0215	01/02/2005	10 years from date of purchase		100.0		11.6	Floating

T-3

As at December 31, 2011
Series No.	Issue Date	Maturity Date(1)	Issued		Outstanding		Interest Rate
			(PLN millions)
EDO0315	01/03/2005	10 years from date of purchase		100.0		4.5	Floating
EDO0415	01/04/2005	10 years from date of purchase		100.0		6.0	Floating
EDO0515	02/05/2005	10 years from date of purchase		100.0		4.6	Floating
EDO0615	01/06/2005	10 years from date of purchase		100.0		3.6	Floating
EDO0715	01/07/2005	10 years from date of purchase		100.0		1.5	Floating
EDO0815	01/08/2005	10 years from date of purchase		100.0		1.3	Floating
EDO0915	01/09/2005	10 years from date of purchase		100.0		2.6	Floating
EDO1015	01/10/2005	10 years from date of purchase		100.0		1.1	Floating
EDO1115	02/11/2005	10 years from date of purchase		100.0		2.5	Floating
EDO1215	01/12/2005	10 years from date of purchase		100.0		4.6	Floating
EDO0116	01/01/2006	10 years from date of purchase		100.0		5.9	Floating
EDO0216	01/02/2006	10 years from date of purchase		100.0		4.4	Floating
EDO0316	01/03/2006	10 years from date of purchase		100.0		2.1	Floating
EDO0416	01/04/2006	10 years from date of purchase		100.0		1.3	Floating
EDO0516	01/05/2006	10 years from date of purchase		100.0		1.2	Floating
EDO0616	01/06/2006	10 years from date of purchase		100.0		1.2	Floating
EDO0716	01/07/2006	10 years from date of purchase		100.0		3.8	Floating
EDO0816	01/08/2006	10 years from date of purchase		100.0		5.0	Floating
EDO0916	01/09/2006	10 years from date of purchase		100.0		2.8	Floating
EDO1016	01/10/2006	10 years from date of purchase		100.0		2.3	Floating
EDO1116	01/11/2006	10 years from date of purchase		100.0		6.0	Floating
EDO1216	01/12/2006	10 years from date of purchase		100.0		8.3	Floating
EDO0117	01/01/2007	10 years from date of purchase		100.0		13.6	Floating
EDO0217	01/02/2007	10 years from date of purchase		100.0		11.4	Floating
EDO0317	01/03/2007	10 years from date of purchase		100.0		5.9	Floating
EDO0417	01/04/2007	10 years from date of purchase		100.0		4.1	Floating
EDO0517	01/05/2007	10 years from date of purchase		100.0		13.2	Floating
EDO0617	01/06/2007	10 years from date of purchase		100.0		5.6	Floating
EDO0717	01/07/2007	10 years from date of purchase		100.0		10.2	Floating
EDO0817	01/08/2007	10 years from date of purchase		100.0		15.4	Floating
EDO0917	01/09/2007	10 years from date of purchase		100.0		30.9	Floating
EDO1017	01/10/2007	10 years from date of purchase		100.0		23.5	Floating
EDO1117	01/11/2007	10 years from date of purchase		100.0		35.0	Floating
EDO1217	01/12/2007	10 years from date of purchase		200.0		82.8	Floating
EDO0118	01/01/2008	10 years from date of purchase		200.0		77.4	Floating
EDO0218	01/02/2008	10 years from date of purchase		200.0		27.9	Floating
EDO0318	01/03/2008	10 years from date of purchase		200.0		44.7	Floating
EDO0418	01/04/2008	10 years from date of purchase		200.0		27.2	Floating
EDO0518	01/05/2008	10 years from date of purchase		200.0		24.5	Floating
EDO0618	01/06/2008	10 years from date of purchase		200.0		16.7	Floating
EDO0718	01/07/2008	10 years from date of purchase		200.0		43.8	Floating
EDO0818	01/08/2008	10 years from date of purchase		200.0		62.8	Floating
EDO0918	01/09/2008	10 years from date of purchase		200.0		42.6	Floating
EDO1018	01/10/2008	10 years from date of purchase		200.0		167.6	Floating
EDO1118	01/11/2008	10 years from date of purchase		500.0		63.9	Floating
EDO1218	01/12/2008	10 years from date of purchase		500.0		71.4	Floating
EDO0119	01/01/2009	10 years from date of purchase		500.0		59.1	Floating
EDO0219	01/02/2009	10 years from date of purchase		500.0		34.4	Floating
EDO0319	01/03/2009	10 years from date of purchase		500.0		80.4	Floating
EDO0419	01/04/2009	10 years from date of purchase		500.0		55.6	Floating
EDO0519	01/05/2009	10 years from date of purchase		500.0		59.7	Floating
EDO0619	01/06/2009	10 years from date of purchase		500.0		74.3	Floating
EDO0719	01/07/2009	10 years from date of purchase		500.0		91.3	Floating
EDO0819	01/08/2009	10 years from date of purchase		500.0		57.2	Floating
EDO0919	01/09/2009	10 years from date of purchase		500.0		80.5	Floating
EDO1019	01/10/2009	10 years from date of purchase		500.0		94.3	Floating
EDO1119	01/11/2009	10 years from date of purchase		500.0		58.8	Floating
EDO1219	01/12/2009	10 years from date of purchase		500.0		94.2	Floating
EDO0120	01/01/2010	10 years from date of purchase		500.0		104.1	Floating
EDO0220	01/02/2010	10 years from date of purchase		500.0		112.9	Floating
EDO0320	01/03/2010	10 years from date of purchase		500.0		159.8	Floating
EDO0420	01/04/2010	10 years from date of purchase		500.0		17.5	Floating
EDO0520	01/05/2010	10 years from date of purchase		500.0		27.0	Floating
EDO0620	01/06/2010	10 years from date of purchase		500.0		17.2	Floating
EDO0720	01/07/2010	10 years from date of purchase		500.0		25.7	Floating
EDO0820	01/08/2010	10 years from date of purchase		500.0		21.8	Floating
EDO0920	01/09/2010	10 years from date of purchase		500.0		19.6	Floating
EDO1020	01/10/2010	10 years from date of purchase		500.0		40.7	Floating
EDO1120	01/11/2010	10 years from date of purchase		500.0		21.4	Floating
EDO1220	01/12/2010	10 years from date of purchase		500.0		27.2	Floating
EDO0121	01/01/2011	10 years from date of purchase		500.0		28.6	Floating
EDO0221	01/02/2011	10 years from date of purchase		500.0		68.8	Floating

T-4

As at December 31, 2011
Series No.	Issue Date	Maturity Date(1)	Issued		Outstanding		Interest Rate
			(PLN millions)
EDO0321	01/03/2011	10 years from date of purchase		500.0		51.3	Floating
EDO0421	01/04/2011	10 years from date of purchase		500.0		37.9	Floating
EDO0521	01/05/2011	10 years from date of purchase		500.0		32.1	Floating
EDO0621	01/06/2011	10 years from date of purchase		500.0		24.7	Floating
EDO0721	01/07/2011	10 years from date of purchase		500.0		35.8	Floating
EDO0821	01/08/2011	10 years from date of purchase		500.0		36.3	Floating
EDO0921	01/09/2011	10 years from date of purchase		500.0		30.8	Floating
EDO1021	01/10/2011	10 years from date of purchase		500.0		22.2	Floating
EDO1121	01/11/2011	10 years from date of purchase		500.0		45.6	Floating
EDO1221	01/12/2011	10 years from date of purchase		500.0		38.6	Floating
Total				25,000.0		2,948.8
DOS0112	01/01/2010	2 years from date of purchase		1,000.0		243.3	4.75%
DOS0212	01/02/2010	2 years from date of purchase		1,000.0		77.7	4.50%
DOS0312	01/03/2010	2 years from date of purchase		1,000.0		86.8	4.50%
DOS0412	01/04/2010	2 years from date of purchase		1,000.0		60.1	4.25%
DOS0512	01/05/2010	2 years from date of purchase		1,000.0		47.7	4.00%
DOS0612	01/06/2010	2 years from date of purchase		1,000.0		69.3	4.00%
DOS0712	01/07/2010	2 years from date of purchase		1,000.0		122.1	4.00%
DOS0812	01/08/2010	2 years from date of purchase		1,000.0		132.0	4.00%
DOS0912	01/09/2010	2 years from date of purchase		1,000.0		92.5	4.00%
DOS1012	01/10/2010	2 years from date of purchase		1,000.0		134.0	4.00%
DOS1112	01/11/2010	2 years from date of purchase		1,000.0		107.1	4.00%
DOS1212	01/12/2010	2 years from date of purchase		1,000.0		91.6	4.00%
DOS0113	01/01/2011	2 years from date of purchase		1,000.0		61.3	4.00%
DOS0213	01/02/2011	2 years from date of purchase		1,000.0		94.4	4.50%
DOS0313	01/03/2011	2 years from date of purchase		1,000.0		142.6	4.50%
DOS0413	01/04/2011	2 years from date of purchase		1,000.0		92.7	4.50%
DOS0513	01/05/2011	2 years from date of purchase		1,000.0		94.4	4.50%
DOS0613	01/06/2011	2 years from date of purchase		1,000.0		84.8	4.50%
DOS0713	01/07/2011	2 years from date of purchase		1,000.0		65.1	4.50%
DOS0813	01/08/2011	2 years from date of purchase		1,000.0		69.0	4.50%
DOS0913	01/09/2011	2 years from date of purchase		1,000.0		68.4	4.50%
DOS1013	01/10/2011	2 years from date of purchase		1,000.0		59.2	4.50%
DOS1113	01/11/2011	2 years from date of purchase		1,000.0		79.9	4.50%
DOS1213	01/12/2011	2 years from date of purchase		1,000.0		136.9	4.50%
Total				24,000.0		2,312.9

____________

1)	A series with a maturity date expressed as being a date falling a specified time after the “date of purchase” will be sold to purchasers within the month following its stated issue date and will be repayable on that maturity date.

Source: Ministry of Finance

T-5

State Treasury External Debt

With a maturity at issuance of more than one year

	As at December 31, 2011
				Principal Amount
	Currency	Year of Issue	Year of Maturity	Fixed Rate			Floating Rate		Interest Rate(1)
				(U.S.$ millions)
Paris Club Creditors	JPY	1991	2014		79.5			—		3.407
Other External Creditors(2)
Collateralized Par Bonds	U.S.$	1994	2024		178.5			—		4.00	(3)
Collateralized RSTA Bonds	U.S.$	1994	2024		118.5			—		4.75	(3)
$100 million 7.75% Notes	U.S.$	1997	2017		100.0			—		7.750
EUR 744 million 5.5% Notes	EUR	2002	2012		961.6			—		5.500
$1.4 billion 6.25% Notes	U.S.$	2002	2012		1,362.9			—		6.250
EUR 3 billion 4.5% Notes	EUR	2003	2013		3,877.3			—		4.500
$1 billion 5.25% Notes	U.S.$	2003	2014		1,000.0			—		5.250
¥6.8 billion 2.6475% Notes	JPY	2004	2034		87.7			—		2.6475
¥16.8 billion 3.22% Notes	JPY	2004	2034		216.7			—		3.220
EUR 5.25 billion 4.2% Notes	EUR	2005	2020		6,785.3			—		4.200
EUR 500 million 4.45% Notes	EUR	2005	2035		646.2			—		4.450
CHF1.5 billion 2.625% Notes	CHF	2005	2015		1,594.8			—		2.625
¥75 billion 1.0% Notes	JPY	2005	2012		967.4			—		1.000
EUR 500 million 4.25% Notes	EUR	2005	2055		646.2			—		4.250
$81.81 million 3m Libor + 0.115% Notes	U.S.$	2005	2015		—			81.8	Floating
$1 billion 5.0% Notes	U.S.$	2005	2015		1,000.0			—		5.000
$100 million 5.408% Notes	U.S.$	2005	2035		100.0			—		5.408
¥50 billion 2.24% Notes	JPY	2005	2021		645.0			—		2.240
EUR 3 billion 3.625% Notes	EUR	2006	2016		3,877.3			—		3.625
¥25 billion 2.06% Notes	JPY	2006	2016		322.5			—		2.060
¥60 billion 2.62% Notes	JPY	2006	2026		774.0			—		2.620
EUR 1.5 billion 4.5% Notes	EUR	2007	2022		1,938.7			—		4.500
CHF725 million 2.875% Notes	CHF	2007	2012		770.8			—		2.875
CHF1 billion 3.25% Notes	CHF	2007	2019		1,063.2			—		3.250
¥50 billion 2.81% Notes	JPY	2007	2037		645.0			—		2.810
CHF250 million 3.625% Notes	CHF	2008	2017		265.8			—		3.625
¥25 billion 3.3% Notes	JPY	2008	2038		322.5			—		3.300
EUR 2 billion 5.625% Notes	EUR	2008	2018		2,584.9			—		5.625
EUR 1.75 billion 5.875% Notes	EUR	2009	2014		2,261.8			—		5.875
$3.5 billion 6.375% Notes	U.S.$	2009	2019		3,500.0			—		6.375
CHF750 million 3.0% Notes	CHF	2009	2014		797.4			—		3.000
EUR 500 million 4.675% Notes	EUR	2009	2019		646.2			—		4.675
EUR 410 million 5.125% Notes	EUR	2009	2024		529.9			—		5.125
¥23.3 billion 1.92% Notes	JPY	2009	2012		300.6			—		1.920
¥21.5 billion 2.34% Notes	JPY	2009	2014		277.3			—		2.340
EUR 3 billion 5.25% Notes	EUR	2010	2025		3,877.3			—		5.250
EUR 1.25 billion 3.75% Notes	EUR	2010	2017		1,615.6			—		3.750
CHF625 million 2.125% Notes	CHF	2010	2014		664.5			—		2.125
$1.5 billion 3.875% Notes	U.S.$	2010	2015		1,500.0			—		3.875
EUR 2.0 billion 4.0% Notes	EUR	2010	2021		2,584.9			—		4.000
¥28 billion 3.0% Notes	JPY	2011	2026		361.2			—		3.000
CHF350 million 2.75% Notes	CHF	2011	2016		372.1			—		2.750
$2.0 billion 5.125% Notes	U.S.$	2011	2021		2,000.0			—		5.125
EUR 460 million 5.361% Notes	EUR	2011	2026		594.5			—		5.361
¥25 billion 1.25% Notes	JPY	2011	2015		322.5			—		1.250
$2.0 billion 5.0% Notes	U.S.$	2011	2022		2,000.0			—		5.000
European Investment Bank (1.6784)	U.S.$	1993	2013		2.5	(4)		—		6.80	(5)
European Investment Bank (1.7728)	EUR	1994	2014		32.3	(4)		—		5.80	(5)
European Investment Bank (1.8856)	EUR	1996	2016		43.1	(4)		—		5.38	(5)
European Investment Bank (1.9949)	EUR	1998	2022		168.5	(4)		—		4.80	(5)
European Investment Bank (1.7567)	EUR	1998	2018		84.1	(4)		—		4.50	(5)
European Investment Bank (1.7701)	EUR	1998	2018		60.4	(4)		—		4.10	(5)
European Investment Bank (1.7569)	EUR	1998	2018		72.9	(4)		—		3.75	(5)
European Investment Bank (20.554)	EUR	2000	2019		21.4	(4)		—		4.94	(5)
European Investment Bank (20.574)	EUR	2000	2020		33.7	(4)		—		4.40	(5)
European Investment Bank (21.223)	EUR	2001	2020		37.7	(4)		—		3.90	(5)
European Investment Bank (21.153)	EUR	2001	2020		134.4	(4)		—		3.62	(5)
European Investment Bank (21.229)	EUR	2001	2020		126.7	(4)		—		4.27	(5)
European Investment Bank (21.424)	EUR	2001	2031		301.0	(4)		—		4.36	(5)
European Investment Bank (21.605)	EUR	2002	2026		89.5	(4)		—		4.47	(5)
European Investment Bank (22.290)	EUR	2003	2030		628.0	(4)		—		4.21	(5)
European Investment Bank (22.070)	EUR	2003	2032		64.7	(4)		—		4.62	(5)
European Investment Bank (22.724)	EUR	2004	2017		187.2	(4)		—		3.69	(5)

T-6

	As at December 31, 2011
				Principal Amount
	Currency	Year of Issue	Year of Maturity	Fixed Rate			Floating Rate			Interest Rate(1)
				(U.S.$ millions)
European Investment Bank (22.900)	EUR	2004	2017		280.8	(4)		—			3.69	(5)
European Investment Bank (22.896)	EUR	2004	2025		187.1	(4)		—			4.88	(5)
European Investment Bank (23.379)	EUR	2005	2013		323.4	(4)		—			3.75	(5)
European Investment Bank (23.646)	EUR	2006	2019		562.8	(4)		—			4.25	(5)
European Investment Bank (23.715)	EUR	2006	2027		452.7	(4)		—			4.51	(5)
European Investment Bank (24.128)	EUR	2007	2039		75.0	(4)		—			3.20	(5)
European Investment Bank (24.308)	EUR	2007	2016		614.4	(4)		—			4.07	(5)
European Investment Bank (24.519)	EUR	2008	2018		776.1	(4)		—			4.03	(5)
European Investment Bank (25.093)	EUR	2009	2019		—			873.1	(4)	Floating
European Investment Bank (25.771-01)	EUR	2010	2020		—			776.1	(4)	Floating
European Investment Bank (25.771-02)	EUR	2011	2025		1,293.5	(4)		—			3.72
European Investment Bank (31.785)…..	EUR	2011	2021		—			181.1	(4)	Floating
European Investment Bank (31.786)…..	EUR	2011	2021		—			388.0	(4)	Floating
World Bank	U.S.$	1996	2013		—			4.2		Floating
World Bank	EUR	1996	2013		—			4.1	(4)	Floating
World Bank	U.S.$	1997	2012		—			15.0		Floating
World Bank	EUR	1997	2012		—			17.9	(4)	Floating
World Bank	U.S.$	1997	2012		—			19.8		Floating
World Bank	EUR	1999	2014		—			90.5	(4)	Floating
World Bank	EUR	2000	2015		—			53.1	(4)	Floating
World Bank	EUR	2000	2016		—			14.5	(4)	Floating
World Bank	EUR	2004	2014		—			128.5	(4)	Floating
World Bank	EUR	2004	2014		—			206.7	(4)	Floating
World Bank	EUR	2004	2018		—			28.6	(4)	Floating
World Bank	EUR	2005	2018		—			64.2	(4)	Floating
World Bank	EUR	2006	2021		—			84.8	(4)	Floating
World Bank	EUR	2006	2020		—			175.1	(4)	Floating
World Bank	EUR	2007	2021		—			24.1	(4)	Floating
World Bank	EUR	2008	2038		—			1,260.1	(4)	Floating
World Bank	EUR	2009	2039		—			1,292.4	(4)	Floating
World Bank	EUR	2010	2030		—			1,292.4	(4)	Floating
World Bank	EUR	2011	2031		—			969.3	(4)	Floating
Council of Europe Development Bank	EUR	1999	2014		3.5	(4)		—			4.55
Council of Europe Development Bank	EUR	1999	2014		4.2	(4)		—			5.57
Council of Europe Development Bank	EUR	1999	2014		7.0	(4)		—			5.56
Council of Europe Development Bank	EUR	2000	2015		1.8	(4)		—			5.99
Council of Europe Development Bank	EUR	2000	2015		12.6	(4)		—			5.78
Council of Europe Development Bank	EUR	2000	2015		3.4	(4)		—			5.78
Council of Europe Development Bank	EUR	2001	2016		7.2	(4)		—			5.31
Council of Europe Development Bank	EUR	2001	2016		4.7	(4)		—			5.41
Council of Europe Development Bank	EUR	2002	2017		4.6	(4)		—			4.98
Council of Europe Development Bank	EUR	2002	2017		0.1	(4)		—			4.59
Council of Europe Development Bank	EUR	2001	2016		54.6	(4)		—			5.33
Council of Europe Development Bank	EUR	2001	2016		15.8	(4)		—			5.35
Council of Europe Development Bank	EUR	2002	2016		32.5	(4)		—			5.4425
Council of Europe Development Bank	EUR	2002	2017		9.4	(4)		—			5.2
Council of Europe Development Bank	EUR	2003	2018		—			22.6	(4)	Floating
Council of Europe Development Bank	EUR	2005	2020		—			5.8	(4)	Floating
Council of Europe Development Bank	EUR	2005	2020		—			2.9	(4)	Floating
Council of Europe Development Bank	EUR	2006	2021		22.6	(4)		—			4.29
Council of Europe Development Bank	EUR	2008	2033		—			1.3	(4)	Floating
Council of Europe Development Bank	EUR	2009	2024		—			6.5	(4)	Floating
Council of Europe Development Bank	EUR	2010	2025		—			9.0	(4)	Floating
Council of Europe Development Bank	EUR	2005	2020		—			2.9	(4)	Floating
Other loans	JPY	1990	2015		52.2			—			2.90
TOTAL					63,922.3			8,190.4

____________

In this table “EUR” means Euro, “U.S.$” means United States dollar, “JPY” means Japanese yen and “CHF” means Swiss franc.

(1)	The interest rate on floating rate external debt is reset periodically by reference to a number of different bases.

(2)	External debt payable to international finance institutions is generally payable in installments over the life of the loans; the remainder is repayable in a single installment at maturity.

(3)	Increasing in stages to 5.00% in 2015.

(4)	The exchange rate as at December 31, 2011.

(5)	The interest rate of the last tranche.

Source: Ministry of Finance

T-7

State Guarantees and Sureties

With a maturity at issuance of more than one year

	As at December 31, 2011
	Maturities
	2012		2013		2014		2015		2016		2017
	(PLN millions)
Foreign guarantees		1,639.5		2,383.5		2,525.6		1,790.1		1,869.9		1,720.1
Domestic sureties and guarantees		2,696.5		1,661.9		8,872.6		1,194.1		1,332.7		1,556.7
TOTAL		4,336.0		4,045.5		11,398.2		2,984.2		3,202.6		3,276.8

____________

Source: Ministry of Finance

T-8

ISSUER
The State Treasury of the Republic of Poland Ministry of Finance ul. Świętokrzyska 12 00-916 Warsaw Poland
FISCAL AGENT
Citibank N.A., London Citigroup Centre Canada Square London E14 5LB England
LEGAL ADVISERS
To the Republic of Poland as to United States law:	To the Republic of Poland as to Polish law:
White & Case LLP 5 Old Broad Street London EC2N 1DW England	White & Case W. Daniłowicz, W. Jurcewicz i Wspólnicy -Kancelaria Prawna Spółka Komandytowa Centrum Królewska ul. Marszałkowska 142 00-061 Warsaw Poland
LUXEMBOURG LISTING, PAYING AND TRANSFER AGENT
Dexia Banque Internationale à Luxembourg, société anonyme 69 route d’Esch L-2953 Luxembourg Luxembourg

PART II

(As required by Items (11) and (14) of Schedule B of the Securities Act of 1933)

An itemized statement showing estimated expenses of the State Treasury, other than underwriting discounts and commissions, in connection with the offering and sale of a particular issue of securities will be provided in the post-effective amendment to the Registration Statement relating to such issue or in a report filed under the Securities Exchange Act of 1934 that is incorporated by reference in this Registration Statement.

II.

The issuer hereby agrees to furnish a copy of the opinion of the Director of the Legal Department of the Ministry of Finance, Republic of Poland as to the legality of each issue of the securities in post-effective amendments to this Registration Statement or in a report filed under the Securities Exchange Act of 1934 that is incorporated by reference in this Registration Statement, in each case together with a translation, where necessary, into the English language.

UNDERTAKINGS

The State Treasury hereby undertakes:

(1)	To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:

(i)

to include any prospectus required by section 10(a)(3) of the Securities Act of 1933; and

(ii)

to reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement; and

(iii)

to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement;

provided, however, that the State Treasury shall not be required to file a post-effective amendment otherwise required by clause (i) or clause (ii) above if the information required to be included in a post-effective amendment is contained in any report filed under the Securities Exchange Act of 1934 that is incorporated by reference in this Registration Statement.

(2)

That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3)	To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4)

That, for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as at the time it was declared effective.

II-1

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement consists of:

(1)	Facing Sheet;

(2)	Cross Reference Sheet;

(3)	Part I, consisting of the Prospectus;

(4)	Part II, consisting of pages numbered II-1 through II-4; and

(5)	The following exhibits:

(A)

Form of Fiscal Agency Agreement

(B)

Form of Note (attached to the form of Fiscal Agency Agreement under A above)

(C)

Form of Underwriting Agreement

(D)

Legal Opinion of the Director of the Legal Department of the Ministry of Finance of the Republic of Poland as to the legality of the Securities

(E)

Opinions of White & Case LLP, U.S. counsel, and White & Case W. Daniłowicz, W. Jurcewicz i Wspólnicy - Kancelaria Prawna Spółka Komandytowa, Polish counsel, to the Republic of Poland as to the legality of the Securities

(F)

The consent of the Director of the Legal Department, Ministry of Finance, Republic of Poland (included in (D))

(G)

The consents of White & Case LLP and White & Case W. Daniłowicz, W. Jurcewicz i Wspólnicy - Kancelaria Prawna Spółka Komandytowa (included in (E))

(H)

The consent of Dominik Radziwiłł, Undersecretary of State in the Ministry of Finance, Republic of Poland (included on page II-3)

II-2

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, duly authorized, in the City of Warsaw on June 1, 2012.

THE STATE TREASURY OF THE REPUBLIC OF POLAND,

represented by the Minister of Finance

By	/s/ Dominik Radziwiłł
Name:	Dominik Radziwiłł(1)
Title:	Undersecretary of State in the Ministry of Finance, Republic of Poland

__________

(1)	Consent is hereby given to the use of his name in connection with the information specified in this Registration Statement to have been supplied by him and stated on his authority.

II-3

EXHIBIT INDEX

Exhibit Number		Description
A	Form of Fiscal Agency Agreement
B	Form of Note (attached to the form of Fiscal Agency Agreement under A above)
C	Form of Underwriting Agreement
D	Legal Opinion of the Director of the Legal Department of the Ministry of Finance of the Republic of Poland
E	Opinions of White & Case LLP, U.S. counsel, and White & Case W. Daniłowicz, W. Jurcewicz i Wspólnicy-Kancelaria Prawna Spółka Komandytowa, Polish counsel, to the Republic of Poland as to the legality of the Notes
F	The consent of the Director of the Legal Department, Ministry of Finance, Republic of Poland (included in (D))
G	The consents of White & Case LLP and White & Case W. Daniłowicz, W. Jurcewicz i Wspólnicy - Kancelaria Prawna Spółka Komandytowa (included in (E))
H	The consent of Dominik Radziwiłł, Undersecretary of State in the Ministry of Finance, Republic of Poland (included on page II-3)

__________

II-4

Title of each class of securities to be registered	Amount to be registered	Proposed maximum offering price per unit (1)	Proposed maximum aggregate offering price (1)	Amount of registration fee
Debt Securities	U.S. $5,000,000,000	100%	U.S. $5,000,000,000	U.S. $573,000