Moody's changed Poland's rating outlook to negative

The ratings for the foreign currency senior unsecured notes and the medium-term note (MTN) program were affirmed at (P)A2, and the short-term issuer ratings were affirmed at Prime-1 (P-1).

"Our decision to change the outlook to negative reflects a significantly weaker outlook for fiscal and debt indicators compared to our previous expectations. If the government is unable to address spending pressures and headwinds to revenue growth, this will indicate weaker fiscal strength and policy effectiveness compared to our current assessment," the statement read.

According to Moody's analysts, the main risks to the updated fiscal and debt outlook stem from the impasse between the government and the president and the likelihood of an increase in government spending before the parliamentary elections in 2027 and beyond.

Of the three largest rating agencies, Moody's rates Poland's creditworthiness the highest, at "A2." Poland's rating according to Fitch and S&P is "A-," one level below Moody's.

In early September, Fitch Ratings confirmed Poland's long-term foreign currency rating at "A-", but changed its outlook to negative from stable .

As Fitch stated in a press release at the time, the risks to Poland's public finances have increased since the last review. Analysts believe that significant fiscal slippages in 2024 and 2025, with the deficit averaging 6.7% of GDP, increased political challenges related to implementing fiscal measures, and the lack of a credible fiscal consolidation strategy will likely hinder Poland's ability to significantly reduce its fiscal deficit before the next parliamentary elections in 2027.