Fitch’s A-level credit rating for Poland is testimony to the country’s creditworthiness

Polish companies are receiving llittle or no state aid to compensate for the war in Ukraine.
By Grzegorz Adamczyk
3 Min Read

Poland’s long-term foreign currency rating was kept at “A-” with a stable outlook by global rating agency Fitch over the weekend, the same level as set by S&P, but lower than the A2 rating given by Moody’s.

According to Fitch, “Poland’s ratings are supported by a diversified economy, a fairly sound macroeconomic framework anchored by EU membership, and slightly lower public debt levels than rated peers.”

Midterm growth is forecast to reach 3-3.5 percent by the agency, “thanks to a combination of strong investment dynamics, high productivity and a normalization of consumption trends as inflation eases.”

However, this was balanced by “lower governance indicators and income levels than the ‘A’ medians.” According to the rating agency, the risk factors for a change in rating include “rapid increase in government debt, sizable deterioration in governance, potentially further weakening of relations with the EU and/or damaging macro-fiscal policy credibility, and erosion in competitiveness, potentially stemming from inflation entrenched at high levels and/or persistently higher energy prices.”

The agency sees the upcoming elections in Poland as a risk in terms of fiscal pressure. It noted the government’s plans to increase the monthly child benefit to around €200 from early 2024 while proposing other expenditures without any off-setting measures to curtail expenditure elsewhere. Fitch wrote it feels that the elections will not have any impact on macroeconomic stability or Poland’s attractiveness to foreign investors, although it concedes that they could have an impact on Polish-EU relations and the flow of EU funds. 

According to Fitch, the rating could be improved if fiscal consolidation over the medium term led to a firm decline in the government debt-to-GDP ratio, providing evidence of higher sustained GDP growth prospects. However, Fitch expects the public deficit to fall only to 3.7 percent of GDP in 2024, which might lead to Poland being placed in the Excessive Deficit Procedure, should EU fiscal rules be reinstated next year.

According to the Fitch forecast for the economy, the Polish general government sector’s deficit in 2023 will be 5.3 percent, compared with the “A” median of 4.2 percent. The agency expects primary fiscal deficits to push the public debt-to-GDP ratio to over 50 percent this year and 53 percent by 2027. 

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