Evaluation groups S&P and Fitch confirmed the long on Friday night ranking of Poland in foreign currency at the “A-” level with a stable outlook.
In their analysis, the S&P group draws attention to, among others: the prospects for economic growth and better relations with the EU.
“A stable attitude reflects a balance between strong medium-term economic growth prospects for Poland and better relations with the EUand near-term risks related to weak external demand, loose fiscal policy and increased underlying price pressures,” S&P said in a statement.
However, the group expects the Polish economy to deal with short-term headwinds, such as weaker external demand from major trading partners, especially as private domestic consumption benefiting from deflation.
“The Polish government, in office from December 2023, has successfully achieved access to EU funds,” we read.
“While we expect continued inflows of EU funds, we believe policy implementation remains difficult for the new government despite a busy election calendar and domestic political landscape,” S&P said.
S&P expects the implementation of KPO-related reforms in several areas, including the judiciary, to remain a challenge, mainly because of the president’s veto powers. This increases uncertainty in S&P’s view of the government’s future ability to meet various RRF milestones and policy conditions.
However, according to S&P, Poland will be able to receive large payments from the RRF in 2024-2026, supporting investment activity.
The group estimates that Donald Tusk’s government has focused on fulfilling election promises and expects this, which will prevent significant fiscal consolidation, to continue at least until the presidential elections. sitting in May 2025.
S&P believes that undoing some of the reforms brought by the previous PiS government, especially in the judiciary, could be difficult and complex under the law and could encounter obstacles -starra in the Constitutional Tribunal.
The organization predicts Poland’s GDP growth in 2024 at 2.8% and in 2025 at 3.1%. and the general government sector deficit according to S&P in 2024 just above 5%.
The fulfillment of election promises, an increase in debt servicing costs and pension payments, as well as the maintenance of military spending will put pressure on the state budget in the next two to three years, S&P estimates.
Fitch: Political tensions could reduce government effectiveness
According to Fitch, the initial political and institutional conflict between the government and the opposition has eased somewhat in recent months, but continued tensions, along with a tight election calendar, could undermine the government’s effectiveness. reduce, complicate fiscal consolidation opportunities and reduce enforcement. reforms required for future KPO payments.
“Poland’s ranking is supported by a diversified and resilient economy, a very solid macroeconomic framework reinforced by EU membership, strong external financing and a higher government revenue base and more stable than other countries in the ranking basket. levels and indicators of governance and a larger fiscal deficit,” we read in the report.
Fitch increased the forecast for Poland’s GDP dynamics in 2024 to 2.8%. from 2.2 percent, and for 2025 it is estimated at 3.2 percent.
The group does not expect any change in interest rates. in Poland in 2024 and 100 bps. cuts in 2025. Fitch believes that monetary policy in Poland has been politicized by pre-election rate cuts and efforts by a group of MPs to bring the president of the NBP before the State Tribunal.
2024-05-10 20:40:16
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