Poland's government approved an early buyback of a large chunk of communist-era debt to a group of six countries in the Paris Club, a government official said Tuesday.
Deputy Finance Minister Wieslaw Szczuka said that repayment of the 3.3 billion euros ($4.26 billion) portion of the debt will take place March 31 together with a regularly scheduled repayment of the 900 million euros ($1.16 billion) principal.
The total debt, which amounts to 12.3 billion euros ($15.9 billion), matures between 2005 and 2009.
The joint amount will cut by 29 percent the sum Poland owes 16 out of the 19 members of the Paris Club — an informal group of sovereign creditors.
In February, Poland reached a deal with the Paris Club to repurchase most of its debt, which dates backs to the 1970s, at par value.
With the payback, Poland hopes to save on the high, often fixed interest rates it pays on the debt.
The operation will be primarily funded through issuance of sovereign bonds, spread out over the next 12 to 18 months to minimize the impact on the market. Szczuka said favorable market conditions made it the right time for the move.
Poland, one of 10 mostly ex-communist countries to join the European Union last year, remains the only EU country with outstanding debts to the Paris Club.
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