Bad news for Poland. A well -known agency changes the perspective of rating
Moody’s agency has left Poland’s rating at the current level. The rating perspective, however, was changed from stable to negative.
On Friday, the Moody’s Rating Agency announced the decision to maintain Poland’s credit rating at an unchanged A2/P-1 level for long-term and short-term liabilities. The rating perspective has been changed from stable to negative.
The Ministry of Finance emphasizes in a statement that the Agency justified the decision to maintain Poland’s credit rating, citing the country’s high economic strength, with an increase in a real GDP of almost 3 percent. and progressive convergence of income towards the EU average. In addition, the Polish credit profile uses a still moderate public debt burden in combination with solid creditworthiness indicators. Poland’s rating at A2 level already includes increased geopolitical risk in the context of Russia’s war with Ukraine.
Why a negative rating perspective?
The decision to change the perspective of rating to a negative reflects the weaker perspective of fiscal indicators and public debt compared to previous expectations. The agency forecasts much larger budget deficits of the sector of government and local government institutions and a delay in gradual fiscal consolidation, which will start next year. The risk is primarily due to the impasse between the government and the president and the probability of increasing government expenditure before the parliamentary elections in 2027 and in the long run.
As the Ministry of Finance emphasizes, the updated forecast of the higher budget deficit of the sector of government and local government institutions takes into account increased pressure on social expenses related to the rapid aging of society, growing wages in the public sector, increased interest payments and persistent increased defense expenses.
– According to the agency, the perspective has a chance to return to a stable, if Poland enters a reliable fiscal consolidation path, significantly slowing down the increase in public debt load and leading to only a gradual weakening of the index indicators We read in a statement of the Ministry of Finance.
On the other hand, Polish rating from A2 may be reduced if the load of public debt increases and the debt service ability to weakens significantly. This will happen if the government is unable to stop or balance spending pressure over the next few years. In addition, a significant deterioration in regional security can also show pressure to reduce Poland’s rating.
Rating is a assessment of creditworthiness that is a measure of risk related to the investment in the issuer’s debt papers. Rating is broadcast by an rating agency based on the assessment of economic, political and social risk. It serves investors to assess the risk associated with investing in a given country. The higher the rating, the more stable and safer the economy, which allows you to take loans on lower terms.
