On Friday evening, Moody’s rating agency affirmed Poland’s long-term foreign currency rating at the A- level with a stable outlook.
The agency states that Poland’s rating is bolstered by its robust economic and fiscal foundations, as well as an institutional framework that includes the strengthening of civil society and the judiciary.
Moody’s, in a press release, specifically mentioned that the unlocking of European Union funds will bolster GDP growth at robust levels.
The agency added that while the fiscal deficit is projected to stay above 3% of GDP, leading to a slow increase in the government’s debt burden to nearly 60% of GDP by 2027, both the debt burden and debt affordability are expected to remain generally consistent with those of rating peers.
Furthermore, the rating considers Poland’s heightened vulnerability to geopolitical event risks, particularly in the context of the ongoing war between Russia and Ukraine.
The rating could potentially improve if there were better-than-expected relations between the president and the coalition government, leading to a swift restoration of full judicial independence and supporting the implementation of other policy initiatives.
“Indications that the currently expected weakening of Poland’s debt metrics turns out less pronounced and that stronger fiscal consolidation efforts lead to debt levels stabilizing well below 60%of GDP, ultimately re-building the sound pre-pandemic public sector balance sheet, would be credit-positive,” Moody’s wrote.
According to the agency, a scenario involving a significantly faster deterioration of the government’s debt burden would exert downward pressure on the ratings.
Moody’s indicated that a renewed deterioration concerning the rule of law, which could negatively impact Poland as a business location, would also be credit-negative.
Previously, in April 2022, Moody’s affirmed Poland’s rating at A2. The agency skipped the reviews of the country’s A2 rating in autumn 2022 and spring 2023. However, it did not issue a scheduled report in autumn 2023.
Since the A2 rating was first established through a two-notch upgrade in late 2002, Moody’s has maintained the highest rating for Poland among major agencies.
Among the three major rating agencies, Moody’s assigns the highest rating to Poland. In contrast, both Fitch and S&P give Poland a slightly lower rating of A-. However, all three agencies agree on a ‘stable’ outlook for Poland.
Moody’s, in a press release, specifically mentioned that the unlocking of European Union funds will bolster GDP growth at robust levels.
The agency added that while the fiscal deficit is projected to stay above 3% of GDP, leading to a slow increase in the government’s debt burden to nearly 60% of GDP by 2027, both the debt burden and debt affordability are expected to remain generally consistent with those of rating peers.
Furthermore, the rating considers Poland’s heightened vulnerability to geopolitical event risks, particularly in the context of the ongoing war between Russia and Ukraine.
The rating could potentially improve if there were better-than-expected relations between the president and the coalition government, leading to a swift restoration of full judicial independence and supporting the implementation of other policy initiatives.
“Indications that the currently expected weakening of Poland’s debt metrics turns out less pronounced and that stronger fiscal consolidation efforts lead to debt levels stabilizing well below 60%of GDP, ultimately re-building the sound pre-pandemic public sector balance sheet, would be credit-positive,” Moody’s wrote.
According to the agency, a scenario involving a significantly faster deterioration of the government’s debt burden would exert downward pressure on the ratings.
Moody’s indicated that a renewed deterioration concerning the rule of law, which could negatively impact Poland as a business location, would also be credit-negative.
Previously, in April 2022, Moody’s affirmed Poland’s rating at A2. The agency skipped the reviews of the country’s A2 rating in autumn 2022 and spring 2023. However, it did not issue a scheduled report in autumn 2023.
Since the A2 rating was first established through a two-notch upgrade in late 2002, Moody’s has maintained the highest rating for Poland among major agencies.
Among the three major rating agencies, Moody’s assigns the highest rating to Poland. In contrast, both Fitch and S&P give Poland a slightly lower rating of A-. However, all three agencies agree on a ‘stable’ outlook for Poland.
