Moody’s Lowers Poland’s Credit Rating Amid Fiscal Concerns
Credit ratings agency Moody’s announced on Friday that it has downgraded Poland’s sovereign credit rating from “A2” to “A3”, citing ongoing issues with the country’s fiscal health. This change reflects concerns over Poland’s ability to manage its finances while continuing to fund significant defence, infrastructure, and social spending, which have contributed to some of the highest budget deficits in the European Union.
Moody’s explained that large fiscal deficits have not only increased the burden of government debt but have also raised funding costs, making it harder for Poland to manage its debt.
In late August, Finance Minister Andrzej Domanski presented a draft budget indicating that the general government deficit is expected to remain at 7.1% of GDP in 2027. The Fiscal Council of Poland pointed out this week that the draft budget lacks a clear plan to improve public finances, highlighting a serious risk that public debt could exceed 55% of GDP.
Despite these concerns, Moody’s maintained a “stable” outlook for Poland, upgraded from “negative.” The agency believes that following the upcoming elections in November 2027, the government may adhere more closely to fiscal rules, leading to improved debt management later in the decade.
In response to the credit downgrade, Domanski expressed a calm yet serious approach. He stated on X that the Polish economy continues to grow strongly and remains resilient. He emphasized the need for collaboration among all state institutions, including the President, to strengthen public finances.
Political tensions are evident in Poland, particularly between the government aligned with Brussels and the conservative-nationalist President Karol Nawrocki. A notable issue arose in July when Nawrocki submitted a proposed windfall tax on the profits of oil and gas companies to the constitutional court, further demonstrating the current political gridlock in the country.
