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Monday, April 22, 2024

KPO. EU funds. Unlocking EU funds. Moody’s rates

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Unlocking EUR 137 billion (PLN 600 billion) from EU funds will have a positive impact on Poland’s credit profile (rating), Moody’s believes. As added, the measures will have a positive impact on economic growth.

“On February 29, the European Commission announced that it would unblock approximately EUR 137 billion (17.9% of GDP in 2023) of EU funds intended for Poland, which were suspended due to the erosion of the rule of law,” the agency’s report recalled.

“The EC’s decision comes after the change of government in Poland in December 2023 and after actions aimed at reforms restoring the rule of law, which significantly improved bilateral relations with the EU. EU funds are positive for Poland’s credit profile (credit positive) because they support economic growth and fiscal prospects,” it added.

Moody’s economic forecast

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“In order to complete the procedure under Article 7 of the Treaty on the Functioning of the European Union (Treaty on the Functioning of the European Union – ed.), the Polish government announced the implementation of the ‘Action Plan’ (action plan – ed.) to restore the rule of law. Key reforms are aimed at eliminating political influence in Craiova the Judicial Council, restoring the lawful functioning of the Constitutional Tribunal, strengthening the independence of the Supreme Court and separating the positions of the Minister of Justice and the Prosecutor General. If the proposed reforms are successful in restoring the rule of law, they would be positive for the credit profile,” it added.

Last week European Commission issued a preliminary positive assessment of Poland’s first application for payments from the Reconstruction Fund for EUR 6.3 billion under the KPO. In the EC’s assessment, Poland has also met the conditions necessary to unblock funds from the EU budget for 2021–2027, which will allow Poland access to EUR 76.5 billion from the EU budget.

Read also: Huge money for Poland. There is a decision

Poland’s ratingsPAP/Maciej Zieliński

Poland’s rating

Among the three largest rating agencies, Poland’s creditworthiness is assessed highest by Moody’s – at the “A2” level. Poland’s rating according to Fitch and S&P is “A-“, one level lower than Moody’s. The outlook for all ratings is stable.

Moody’s will open the spring round of reviews of Poland’s rating by major agencies on March 22.

Main photo source: Kuba Puchajda / Shutterstock

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