On Friday, Fitch Ratings confirmed Poland's long-term foreign currency rating at “A-” with a negative outlook, the agency said in a statement. The negative outlook reflects forecasts of continued high fiscal deficits and rapid growth of public debt.
“Poland's 'A-' rating is supported by a large, diversified and resilient economy, the benefits of EU membership, credible monetary and exchange rate policy, and solid external finances compared to other 'A' rated countries. Large fiscal deficits, rapidly growing public debt, lower income levels and governance indicators compared to other countries in the rating basket work in the opposite direction,” Fitch said.
“The negative outlook reflects forecasts of continued high fiscal deficits, leading to a rapid increase in public debt. The lack of a credible fiscal consolidation plan, combined with intensified domestic political challenges, reduces confidence in the government's ability to introduce additional fiscal measures and limit the dynamics of debt growth,” the report said.
Among the factors that may result in a rating downgrade, Fitch lists:
– reduced confidence in the government's ability to stabilize general government debt in relation to GDP in the medium term, due to the failure to implement additional fiscal consolidation measures, lower GDP growth or a significant increase in the costs of servicing government financing;
– prospects for significantly lower GDP growth in the medium term, e.g. due to erosion of competitiveness or a weaker external environment.
In turn, the increase in the rating outlook to stable may be influenced by improved confidence in the government's ability to implement fiscal consolidation measures sufficient to stabilize the debt of the general government sector in the medium term.
The agency lowered Poland's rating outlook to negative from stable in September 2025.
Fitch's chief analyst for Poland, Milan Trajkovic, told PAP Biznes in February that a rating downgrade after assigning a negative outlook does not occur automatically. Typically, Fitch maintains a given outlook (negative or positive) for a given country for a period of one to two years. In rare cases, the decision is made after six months, and very rarely after 2.5–3 years.
Fitch said in a statement on Friday that it forecasts a reduction in the deficit of the Polish public sector in 2026 to 6.5%. GDP from approx. 7 percent in 2025, which may be supported by: freezing PIT tax thresholds and support from social programs in nominal terms, increasing the CIT rate for banks, fighting the gray zone, limiting the increase in wages in the public sector to the level of inflation and increasing excise taxes.
Fitch forecasts that the deficit of the GG sector in Poland will decrease to 6.2%. by 2027, which will reflect a weaker starting point for consolidation after higher deficits in 2024-2025, limited opportunities to take additional fiscal actions due to the likely presidential veto of government bills, and rising defense spending.
“Fitch sees a risk of deterioration of Poland's public finance indicators, including by excluding some defense expenditure from the net expenditure path after triggering the national exit clause. The risk also results from the potential easing of fiscal policy before the parliamentary elections in 2027 and the weakening of the current dynamic GDP growth in an uncertain external environment,” it added.
The agency forecasts that Poland's public debt will increase to approximately 70%. GDP in 2027 (median rating basket “A”: 56%) and will continue to grow in the medium term, from approx. 59%. in 2025, as a result of persistent primary deficits and off-budget net debt issuance, mainly to the Armed Forces Support Fund.
The agency forecasts that in 2027, Poland's debt servicing costs will increase to 7%. income (median “A”: 4.9%), reflecting the relatively short maturities of Polish debt and growing gross financing needs.
In the agency's opinion, the “generally uncooperative and sometimes even hostile” relationship between the government and the president limits Poland's ability to implement economic policy and reforms.
“During his first six months in office, President Karol Nawrocki vetoed laws and opposed tax increases and spending cuts, limiting the scope of fiscal consolidation measures beyond those included in the medium-term fiscal plan (…). The dynamics of the ruling coalition may complicate the decision-making process and weaken the implementation of political decisions. Domestic policy issues will likely have a greater impact on decisions before the next parliamentary elections,” it said.
Fitch increased Poland's GDP growth forecast for 2026 to 3.6%. (the same increase as in 2025) from 3.2%, taking into account the larger inflow of funds from KPO, lower inflation and interest rates.
“We expect that economic growth will slow down to 2.9% in 2027, still above the forecast median of Basket “A” countries of 2.4%, due to less accommodative fiscal policy and the exhaustion of KPO funds. The risks of economic decline dominate, and the timely implementation of reforms constituting the basis for the disbursement of EU funds remains crucial to maintaining the growth rate,” the report wrote.
Referring to Poland's external position, Fitch forecasts Poland's current account deficit at approx. 1%. in 2026-2027, which will be covered by the inflow of net foreign investments at the level of approx. 2%. GDP.
“Poland's international reserves are forecast to reach USD 279 billion (EUR 240 billion) by the end of 2027, covering 5.1 months of projected current foreign payments. As a result of deleveraging the private sector, Poland reduced its net foreign debt to 0.3% of GDP in 2024 and we forecast that it will become a net foreign lender in 2026,” Fitch reports.
Among the three largest rating agencies, Poland's creditworthiness is assessed highest by Moody's – at the “A2” level – with a negative outlook. Poland's rating according to Fitch and S&P is “A-“, one level lower. The outlook for Poland's rating according to S&P is stable, and according to Fitch it is negative. (PAP Business)
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