According to the agency, the current level of long-term foreign currency rating offsets on the one hand a diversified economy, stable economic growth in recent years and a strong macroeconomic framework, and on the other hand governance indicators and income levels below the rating basket.
“The stable outlook for the rating reflects the resilience of the Polish economy to the shock associated with the pandemic, the expected support for economic growth from the EU Reconstruction Fund and the agency’s expectations that after a strong deterioration in the budget deficit and public debt levels in 2020, both indicators will improve in 2021. . ” – added.
There are methodological reasons behind the increase in the short-term foreign currency rating – the improvement of Poland’s international liquidity position.
Fitch forecasts that the deficit of the general government sector in Poland in 2022 will amount to 3.8 percent. GDP. The draft budget for 2022 includes a gg deficit of 2.8%.
The agency raised the forecast of Poland’s GDP growth for 2021 to 5.2 percent. from 4.4%, to 4.5% in 2022, and to 3.8% in 2023.
The main factors that may lead to a rating upgrade are:
– fiscal consolidation in the medium term, which would lead to a lasting decline in the ratio of public debt to GDP;
– sustained improvement in the country’s external finances, including a further decline in the net external debt to GDP ratio;
– sustained GDP growth supporting faster convergence of income to the median of the “A” rating basket, supported by macroeconomic policies that do not lead to the risk of overheating the economy, such as persistent high inflation, high C / A deficits or asset bubbles .
Among the most important factors that could lead to a rating downgrade, Fitch lists:
– sustained increase in government debt, for example failure to consolidate public finances, materialization of contingent liabilities or a slowdown in economic growth in the medium term;
– deterioration of governance standards or the business climate, which would have a negative impact on the economy.
Fitch launched a round of reviews of Poland’s ratings by major agencies in the second half of the year – on October 1, Poland’s credit rating will be examined by S&P Global Ratings and on October 29 by Moody’s.
Out of the three largest rating agencies, Moody’s scores the highest for Poland’s creditworthiness – at the “A2” level. Poland’s rating according to Fitch and S&P is “A-“, one level lower than Moody’s. The prospects of all assessments are stable.
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