• On 22 March 2024 rating agency Moody’s announced a decision about keeping Poland’s credit rating unchanged at the level of A2/P1 for long and short term liabilities, respectively.
• Rating’s outlook remained at a stable level.

Moody’s rating agency in its press release indicates that the ratings are underpinned by very strong economic and fiscal strength which Moody’s expects to be maintained, and strong institutions including improving strength of civil society and the judiciary. In particular, the unlocking of European Union funds will support GDP growth at robust levels. While fiscal deficits are likely to remain above 3% of GDP and contribute to a gradual rise in the government’s debt burden close to 60% of GDP by 2027, both the debt burden and debt affordability will remain broadly in line with rating peers. Moreover, the rating takes into account Poland’s elevated susceptibility to geopolitical event risks in light of Russia’s war with Ukraine.

Rating prospects

Ratings would come under upward pressure in a scenario of better-than-expected relations between the President and the coalition government, that would allow for a swift restoration of full judicial independence and also support implementation of other policy initiatives. Indications that the currently expected weakening of Poland’s debt metrics turns out less pronounced, and that stronger fiscal consolidation efforts lead to debt levels stabilizing well below 60% of GDP, ultimately re-building the sound pre-pandemic public sector balance sheet, would be credit-positive.

Downward pressure on the ratings would emerge in a scenario of materially faster deterioration of the government’s debt burden, beyond Moody’s current baseline. A renewed deterioration with respect to the rule of law which would have a negative impact on the business location Poland would also be credit negative.