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. Last Updated: 07/27/2016

Poland's Debt Reduction Plan: Sold

WARSAW -- Virtually all of Poland's commercial creditors have joined a deal slashing its $13 billion debt and the scale of reduction is likely to exceed 49 percent, Warsaw's chief negotiator Krzysztof Krowacki said Friday.

As much as 99 percent of 500 international debt holders have committed themselves to the restructuring, under which part of the debt would be bought back by Warsaw and the remainder turned into bonds.

During four years of often disrupted negotiations with the creditors' representatives, Poland has strived to obtain a reduction identical to a 1991 halving of a $35 billion debt owed to government lenders. Original lenders and secondary market traders, which held the Polish debt, had offered a much smaller reduction, arguing Poland's potential and economic recovery in the last two years enabled it to pay more.

In a long-awaited breakthrough in March, the two sides reached an agreement, initially envisaging a reduction of about 46 percent, depending on restructuring options selected by the banks.

Poland's debts were generated in the 1970s under the then-Communist government. The country virtually stopped servicing the debts in the 1980s.