WARSAW: Rating agency Moody's will probably keep Poland's rating and negative outlook unchanged at a scheduled review in early September, a Reuters poll suggested on Friday.
The findings come a day after Moody's said in a note that a constitutional crisis in Poland has escalated, threatening its relationship with the European Union and investors. But 15 of the 20 analysts polled on Friday said Moody's would still keep its rating on Poland unchanged at A2 and the rating outlook unchanged at negative at a scheduled potential review on Sept. 9.
The other five said they expected Moody's would cut the rating by one notch to A3. Poland's eurosceptic government has been caught up in an escallating row with the country's top court that has spooked markets in the European Union's biggest estern member.
The ruling Law and Justice (PiS) party has passed several changes to the constitutional court's operational rules that critics, street protesters and EU officials have said undermine its powers. The court ruled some of these change were illegal, but the government ignored the verdicts.
At its last review in May, Moody's confirmed Poland's rating but cut the outlook to negative, citing rising fiscal risks and the conservative government's shift to more unpredictable policies and legislation.
Since then, data showed that private investment by non-financial firms fell by about 7 percent in the first half of the year.
PiS wants to increase state ownership in the banking sector and has introduced new sectoral taxes on financial firms and retailers.
Since May, President Andrzej Duda, an ally of PiS, has presented a plan to solve the problem of costly Swiss franc mortgages, which was more moderate than analysts have expected and triggered a relief rally on bank stocks.
The government has also published a draft budget for next year with a deficit just below the EU ceiling of 3 percent and cut its economic growth forecasts for next year to 3.5 percent from 3.9 percent.
"One the one hand we have a somewhat clearer situation regarding the Swiss franc issue. One the other, an intensification of problems regarding the head of the constitutional court and a slowdown in economic growth," said Societe Generale Warsaw-based economist Jaroslaw Janecki.
"On the positive side, assumptions for next year's budget are somewhat more conservative. I believe these factors balance each other out," said Janecki, who expects no change in the rating.
Moody's has held Poland's A2 rating stable since 2002, when the country was much poorer and more corrupt than it is today. S&P currently rates Poland two notches lower at BBB+, outlook negative. Fitch is one notch lower at A-, outlook stable.
Comments
Comments are closed.