The decision of the Fitch agency aroused political and economic comments. Minister of Finance Andrzej Domański referred to the case, Assessing that this is the result of, among others legislative difficulties resulting from the actions of President Karol Nawrockiwhich was to veto key laws related to fiscal consolidation. The minister also reminded about the challenges related to the war in Ukraine and global economic turbulence.
According to Domański, the government managed to rebuild economic growth, maintains low unemployment and gradually reduces inflation. The minister points out, however, that the loss of a positive rating perspective is a “warning signal”which should be seriously considered by all political parties.
Read also: Rating Fitch. The agency changes Poland's perspective to “negative”. Here are the reasons
The growth of the deficit reduces the perspective
The Ministry of Finance announced that the key justification for the change of the Fitch perspective was a forecast increase in the budget deficit in 2024–2027 and the growing difficulties in implementing fiscal policy. The agency predicts that the deficit can increase to up to 6.9 percent. GDP in 2025, gradually decreasing to 6.3 percent. in 2027, but remaining clearly higher compared to government forecasts.
According to Fitch, the ratio of public debt to GDP is to increase from 49.5 percent. in 2023 to 59.3 percent in 2025, which will bring Poland closer to the 68 percent border GDP In 2027, the Agency also notes that the increase in debt, without appropriate repair activities, may further weaken the credibility of the national fiscal policy and hinder the conduct of economic reforms needed before the parliamentary elections in 2027.
The published analysis indicates the political challenges arising from the actions of the new President Karol Nawrocki. Fitch points out that from the moment of taking office in August, the president blocked the implementation of key laws and He objected to tax increases, while postulating their reduction. In this situation, as the agency assesses, political polarization may negatively affect the space to implement controversial fiscal measures.
– In the opinion of the Ministry of Finance, despite a negative perspective, Poland is still recognized as solid economic foundations, EU membership and stable budget revenues. These are factors that balance the negative effects of a high deficit and growing public debt.
Fitch agency forecasts indicate a GDP increase of 3.2 percent. In the years 2025 and 2026 thanks to national consumption and absorption of EU funds, estimated at a total of 4 percent. GDP in these years. On the other hand, it was reserved that the implementation of reforms necessary to maintain payments from the EU would be crucial for Poland's further economic development.
The agency predicts that the current account deficit will remain at approx. 1 percent. GDP in the years 2025–2027, which will be fully covered by inflows of foreign direct investment. Poland's currency reserves are expected to increase to $ 249 billion. By the end of 2025, which will further strengthen domestic external buffers.
The report paid attention to the historical decline in the foreign debt of the net of Poland, which from the debtor's position in the amount of 37.1 percent. GDP in 2013 reached the status of a net creditor of -1.7 percent. in 2024 Fitch forecasts that this trend is to stay in the medium period, further strengthening the position of Poland.
The Ministry of Finance emphasized that changing the prospect of rating to a negative is not tantamount to a decrease in the rating itself and emphasized that the improvement of Poland's ability to fiscal consolidation may translate into its increase in the future. At the same time, however, it was noted that the weakness of economic growth or problems with the competitiveness of the country may contribute to the reduction of Fitch assessment.
