Balcerowicz Plan

Referred to as "shock therapy", the Balcerowicz Plan was an economic scheme employed in Poland following the collapse of communism in 1989. It was intended to speed up the process of economic liberalization and macro-economic stabilization in Poland, and to stop hyperinflation and eliminate rationing and shortages. Named after Polish Minister of Finance and Deputy Prime Minister Leszek Balcerowicz, the plan was launched on January 1, 1990.

The plan was not without controversy: it involved lifting most price controls, sharp cuts in subsidies to producers and consumers, restrictive credit policies, the immediate liberalization of imports, a currency devaluation of 32 percent, and establishment of a stock market.

Critics of the plan allege that no protection of domestic entities was ever implemented and that most profitable businesses were sold first, often without tenders, leaving weaker ones under government management and unable to compete on open market. They also allege that the plan hurt the state's social security pension system and hurt the domestic economy while benefiting foreign financial speculators.

Supporters of the Balcerowicz plan acknowledge that it produced negative effects (such as high unemployment) but regard these as the necessary price of rebuilding from harmful policies from Communist rule.