Rating agency Moody’s affirmed Friday Poland’s long-term rating in foreign currency at the A2 level with a stable outlook.
The rating echoes the agency’s assessment of Poland’s “high susceptibility to geopolitical event risks,” particularly in terms of security. It is mitigated by Poland’s NATO membership and “its significantly increased self-defense capabilities,” Moody’s wrote in a statement.
“It is also supported by improved relations with the EU since the change in government in December 2023, which has freed up large funds that will support investment over 2025-2028,” the agency wrote.
The stable outlook also reflects Moody's view that Poland’s solid growth prospects counterbalance the impact of the projected increase in the government debt burden and weakening debt affordability.
The rating would come under upward pressure in a scenario of “a significant improvement in the regional security situation and materially lower geopolitical risk.”
“Fundamentally, credit positive developments include a swift restoration of full judicial independence and implementation of other policy initiatives that support economic and fiscal strength,” Moody’s wrote.
According to the agency, 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.
“It is also supported by improved relations with the EU since the change in government in December 2023, which has freed up large funds that will support investment over 2025-2028,” the agency wrote.
The stable outlook also reflects Moody's view that Poland’s solid growth prospects counterbalance the impact of the projected increase in the government debt burden and weakening debt affordability.
The rating would come under upward pressure in a scenario of “a significant improvement in the regional security situation and materially lower geopolitical risk.”
“Fundamentally, credit positive developments include a swift restoration of full judicial independence and implementation of other policy initiatives that support economic and fiscal strength,” Moody’s wrote.
According to the agency, 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.
Downward pressure on Poland’s stable outlook would emerge in a scenario of “a material deterioration of the regional security situation, including more concrete signals of withdrawal of US support.”
Downward pressure on the A2 ratings would further emerge in a scenario of a materially faster increase of the government's debt burden and deterioration of debt affordability indicators beyond Moody's current baseline, the agency added.
A renewed deterioration of the rule of law, which would hurt the business location in Poland, would also be credit negative.
“While our baseline scenario does not assume a military confrontation between NATO and Russia, any military attack on Poland would be followed by an immediate negative rating action. In such a scenario, which we view as a very low risk, very high impact shock, Poland’s rating would come under significant additional pressure, likely leading to a multi-notch rating downgrade,” the agency added.
Poland’s ratings, Moody’s assessed, are supported by its dynamic economy, improved relations with the European Union, which has unlocked sizable investment funds, and a strong albeit deteriorating government balance sheet.
Downward pressure on the A2 ratings would further emerge in a scenario of a materially faster increase of the government's debt burden and deterioration of debt affordability indicators beyond Moody's current baseline, the agency added.
A renewed deterioration of the rule of law, which would hurt the business location in Poland, would also be credit negative.
“While our baseline scenario does not assume a military confrontation between NATO and Russia, any military attack on Poland would be followed by an immediate negative rating action. In such a scenario, which we view as a very low risk, very high impact shock, Poland’s rating would come under significant additional pressure, likely leading to a multi-notch rating downgrade,” the agency added.
Poland’s ratings, Moody’s assessed, are supported by its dynamic economy, improved relations with the European Union, which has unlocked sizable investment funds, and a strong albeit deteriorating government balance sheet.
The agency forecasts that Poland’s GDP growth will increase by 4.0% in 2025 versus 2.9% in 2024, driven by private consumption and investment.
Given further increases in defense spending to 4.7% of GDP, the general government deficit is predicted to decline marginally to 5.8% of GDP in 2025.
“We expect only gradual fiscal consolidation from 2026 onwards, which would stabilize the debt burden slightly above 60% of GDP by 2030,” Moody's wrote.
Among the three major rating agencies, Moody's offers Poland the highest rating. According to Fitch and S&P, Poland's rating is the lower A-. All three give Poland a ‘stable’ outlook.
Given further increases in defense spending to 4.7% of GDP, the general government deficit is predicted to decline marginally to 5.8% of GDP in 2025.
“We expect only gradual fiscal consolidation from 2026 onwards, which would stabilize the debt burden slightly above 60% of GDP by 2030,” Moody's wrote.
Among the three major rating agencies, Moody's offers Poland the highest rating. According to Fitch and S&P, Poland's rating is the lower A-. All three give Poland a ‘stable’ outlook.
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