Poland’s public finances will be closely monitored as it approaches its next election scheduled for late-2027. According to a Fitch Ratings analyst, debt levels are unlikely to stabilize for the first time since credit ratings began. Poland’s credit ratings have generally improved since 1995, with only one small decline in 2016. However, Fitch has recently changed its outlook for Poland’s “A-” credit rating from “stable” to “negative” due to increased borrowing caused by rising defense spending and social costs.
The analyst highlighted that Poland’s divided political situation could make it challenging to reduce the deficit. The rating is expected to remain on a non-stable outlook for one to two years before a decision could be made. Fitch will announce its next rating on February 27. The agency anticipates that Poland’s deficit will be around 7% of output in 2025 and may remain the highest in the EU, dropping below 6% only in 2028.
For Fitch to avoid downgrading Polands rating, it is essential that the government sticks to its fiscal plan, which includes reducing the growth of net expenditures. Additionally, there should be no fiscal loosening measures, and economic growth needs to meet projections.
With information from Reuters
