Fitch Ratings Confirms Poland’s “A-” Long-Term Foreign Currency Rating with Stable Outlook

Fitch Ratings has confirmed Poland’s long-term foreign currency rating at “A-” with a stable outlook, according to a statement released on Friday evening. The agency cited Poland’s diversified economy, strong macroeconomic framework anchored in EU membership, and lower levels of public debt compared to countries in the rating basket as factors supporting the rating. These factors offset the lower levels of governance and income from countries in the median A-rated basket.

However, Fitch also listed several factors that could lead to a rating downgrade for Poland. These include a sharp increase in government debt, a significant deterioration of governance standards potentially damaging macro-fiscal credibility and relations with the EU, and erosion of competitiveness resulting from persistently high inflation and/or energy prices.

On the other hand, Fitch stated that the rating could be improved if there is fiscal consolidation in the medium term leading to a decline in the debt-to-GDP ratio, evidence of sustained higher economic growth, and strengthening of external finance indicators.

The Ministry of Finance also confirmed Fitch’s rating, stating that Poland’s current rating remains at A-/F1 for long- and short-term liabilities in foreign and domestic currency, respectively. The ministry highlighted Fitch’s positive outlook on Poland’s diversified economy, solid macroeconomic foundation, and low level of public debt compared to similar-rated countries. Fitch forecasts a slowdown in economic growth to 0.7% in 2023 due to a domestic demand slowdown but expects stronger growth in the second half of the year.

The agency also expects the unblocking of EU funds by the end of the year, but warns of the risk that authorities may not be able to use all the funds if there are prolonged delays, which could hamper medium-term growth.

It is worth noting that Moody’s rates Poland’s creditworthiness the highest among the three largest rating agencies, at the “A2” level. S&P Global Ratings did not publish a new report on Poland’s rating, but the agency periodically reviews it. Poland’s S&P credit rating remains at “A-” with a stable outlook, one level lower than Moody’s.

Overall, Poland’s creditworthiness remains stable, but the country needs to address certain factors to avoid a potential downgrade and improve its rating.

What factors could lead to an improvement in Poland’s rating according to Fitch Ratings

Fitch Ratings has confirmed Poland’s long-term foreign currency rating at “A-” with a stable outlook. The agency praised Poland’s diversified economy, strong macroeconomic framework, and lower public debt levels compared to other countries in the rating basket. These factors offset the country’s lower levels of governance and income.

However, Fitch also highlighted potential risks that could lead to a rating downgrade for Poland. These include a sharp increase in government debt, a deterioration of governance standards damaging relations with the EU, and erosion of competitiveness due to high inflation or energy prices.

On a positive note, Fitch stated that Poland’s rating could improve if the country focuses on fiscal consolidation, achieves higher economic growth, and strengthens its external finance indicators.

The Ministry of Finance confirmed Fitch’s rating and emphasized the agency’s positive outlook on Poland’s economy, macroeconomic foundation, and low public debt. Fitch expects a temporary slowdown in economic growth but predicts stronger growth in the second half of the year.

Fitch also expects the unblocking of EU funds soon but warns of delays that could hinder medium-term growth if the funds are not utilized in a timely manner.

Moody’s rates Poland’s creditworthiness the highest among the three largest rating agencies, while S&P Global Ratings maintains a stable rating one level lower.

While Poland’s creditworthiness remains stable overall, the country must address certain factors to avoid a potential downgrade and improve its rating.