Poland's credit rating remains at “A2” and its outlook is stable. Of the three largest rating agencies, Moody's rates Poland's creditworthiness the highest. Poland's rating according to Fitch and S&P is “A-“, one level lower.
Moody's: Strong dynamics of the Polish economy and improvement of relations with the EU
Moody's agency in a statement quoted by Ministry of Finance as a justification for Poland's rating, it points to the strong dynamics of the Polish economy and the improvement of relations with the European Union. The agency forecasts GDP growth of 3 percent in 2024 and an increase in dynamics to 3.5 percent in subsequent periods. It added that budget deficit is likely to remain above 5 percent of GDP due to higher defense spending. However, it was emphasized that both the debt burden and costs its service “will be balanced by solid economic growth prospects”. Poland's increased vulnerability to the risk of geopolitical events is mitigated by security guarantees NATO.
Relations between the president and the government. “The rating could be raised”
“The rating could be upgraded in the event of improved relations between the president and the coalition government, which would allow for the rapid restoration of full judicial independence, as well as support the implementation of other policy initiatives,” the release reads. It also added that if the expected weakening of Poland's debt indicators turned out to be less pronounced, and efforts “towards fiscal consolidation led to the debt level stabilizing well below 60% of GDP, ultimately restoring the public sector balance sheet to its pre-pandemic level,” this would also be a positive factor for an upgrade.
And what could lead to a rating downgrade? “The downward pressure on the rating would appear in a scenario of a significantly faster deterioration of debt indicators. A further deterioration in the rule of law situation would be unfavourable for the rating, negatively affecting doing business in Poland,” we read.