During Kwasniewski's first term, the government prioritized continuing economic growth, instituting budgetary reform, curbing social spending, reducing unemployment, and progressing on mass privatization of heavy industry and telecommunications. Kwasniewski focused on four big areas of reform: welfare, education, regional government, and health—an unpopular reorganization of the health service was seen as badly implemented in 1999. He emphasized a great concern for Poland's villages, which suffer from a gap in city and rural incomes. One of the most divisive economic problems that Kwasniewski has had to face is the reform of agriculture. There are approximately two million family farms in Poland, and less than half of them provide a full livelihood for their farmers. More than 25% of Poles have links with farming.
The economy in 2000 was going strong, and reforms were moving ahead. But in 2001, unemployment rose, consumer confidence was low, and the economy was stagnant. The market-friendly finance minister Leszek Balcerowica had difficulty lowering income taxes. He later left politics to become governor of Poland's central bank.
Kwasniewski sees EU membership as Poland's top priority. It is the project on which he has staked his political reputation. Few Poles think farmers will benefit from the EU's common agricultural policy, and people know that steel-workers and coalminers will suffer. Most Poles, however, accept the fact that adjustment to the EU will be painful, but necessary and sobering, in that it will come on the terms of those who are already members. The issue of freedom of movement of Polish workers into western Europe is a particularly contentious matter for Germany and Austria. Kwasniewski has said that the solution is more economic growth in Poland, to create jobs for those who might wish to leave. Another issue is the question of Polish restrictions on the foreign ownership of agricultural land, as Poles fear that Germans will quickly buy up Polish estates. This fear is just one of many that is conjured up in the minds of Poles, especially among those who can still remember World War II. Kwasniewski hopes that with EU membership, those fears will be consigned to the past. A poll conducted in February 2002 showed 56% of Poles in support of EU membership (that number had increased to 66% as of March 2003). In December 2002, the EU formally invited Poland, along with 9 other new members, to join the body in May 2004. Polish voters are to cast their ballots on EU membership in a referendum to be held in June 2003.
As of early 2003, with the global economic downturn negatively affecting the Polish economy, Kwasniewski's leadership needs to direct governmental action on reducing spending, easing the conditions for business, reforming labor law, and investing in infrastructure. Approximately 70% of GDP comes from the private sector, showing that Poland has a functioning market economy. Poland's most serious economic problem is unemployment; levels increased from 9.9% in 1998 to 18.1% in 2002. In addition, Poland's budget deficit needs to be reduced; although reduced to a projected 4.9% of GDP in 2003, the maximum deficit allowed by the EU is 3%, a figure Poland will need to reach by 2004.
Poland in 2003 was dogged by corruption scandals. In early 2003, Parliament conducted an inquiry into allegations of high-level bribe-seeking on the part of politicians, media heads, and regulatory officials. At that time, 70% of Poles said that corruption was a huge problem in the country, up from 46% in 2000 and 33% in the early 1990s. Kwasniewski denied any wrongdoing in the scandals, although the parliamentary committee investigating the allegations had not ruled out calling him to testify before it.