The S&P agency maintained Poland's rating at A- with a stable outlook

The S&P agency maintained both Poland's credit rating and its outlook unchanged. This is quite a surprise after the two remaining major rating agencies revised their view of the state of Polish public finances in recent weeks.

The Polish government's creditworthiness rating has been maintained at A- with a stable outlook, we read in S&P's Friday statement. This is quite a surprise, because economists quite widely expected that at least the rating outlook would be downgraded to negative.

S&P Global analysts openly admitted that
the condition and prospects of Poland's public finances have deteriorated. According to the agency, public debt will increase to 67% of GDP by 2028, which will be a result of the increase in military and social spending, as well as the distribution of “election sausage” as part of the campaign for the parliamentary elections in 2027.

– The stable outlook reflects a balance between stable medium-term economic growth prospects for Poland over the next two years against the risk of increasing the country's economic vulnerability related to rapidly growing debt – we read in S&P's November statement.

S&P reports that Poland's credit rating could be downgraded if medium-term economic growth prospects deteriorate significantly, perhaps combined with growing macroeconomic imbalances or further external shocks, including the unexpected effects of Russia's aggression against Ukraine. A rating cut would also be possible in the event of an escalation of the war in Ukraine, which would weigh more heavily on Polish public finances and economic growth and would pose additional risks to the country's security.

– Although geopolitical risks resulted in a significant increase in military spending, we believe that the Polish economy remained unaffected by hybrid warfare, including drone incursions. Poland's membership in NATO makes any direct military confrontation unlikely – say S&P analysts.

In previous weeks, the outlook for Poland's rating was downgraded to negative by two other major agencies: Moody's and Fitch, which maintained their credit rating at the current level.

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.

KK/PAP

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