ABSTRACT
The new democratic Mazowiecki government, which came to power in September 1989, initiated a program of transition to convert the centrally planned economy into a market economy, starting at the beginning of 1990. While Gross Domestic Product recorded stagnation in 1989, output of industry and construction declined. Only in agriculture was gross production higher than in 1988, thanks to a record grain harvest. The stabilization program aimed at suppressing inflation by policy means used in a modern Western market economy: budget consolidation, a restrictive monetary policy and limitation of wage increases by progressive taxation. The non-agrarian private sector - handicraft, industry, trade, services -partly cushioned lower production in the state sector. In trade with the non-convertible currency area imports in transferable ruble terms dropped by 40%, exports by 3% only, and the trade balance showed an undesired record surplus of TRbl 2.5 bn. The non-agrarian private sector - handicraft, industry, trade, services -partly cushioned lower production in the state sector.
