WARSAW: Fitch retained Poland’s sovereign credit rating at “A-” on Friday, citing the country’s resilient economy and strong external finances relative to similarly rated peers, while maintaining a “negative” outlook due to a lack of strong fiscal consolidation.
The rating action comes as the nation’s budget deficit widened to 141.1 billion zlotys (USD 38.19 billion) at the end of July, compared with 123.7 billion zlotys (USD 33.48 billion) at the end of June.
The agency expects the country’s fiscal deficit to narrow marginally to 6.7% of GDP in 2027, above its February forecast of 6.2 percent, and flagged risks of additional spending ahead of elections.
Fitch said revenue would be constrained by weaker economic growth and a lower corporate tax rate for banks, while the scope for offsetting measures remains limited by the risk of presidential vetoes.
Poland is witnessing a political gridlock between the Brussels-oriented government led by Prime Minister Donald Tusk and the conservative-nationalist President Karol Nawrocki. Last month, Nawrocki referred a bill introducing a windfall tax on oil and gas companies’ profits to the country’s constitutional court.
Poland’s second-quarter GDP growth rose to 3.8% from 3.5% in the first quarter, in line with forecasts.
Fitch expects GDP growth of 3.3 percent in 2026, with investment supported by EU Recovery and Resilience Facility projects and high defence spending, partly offsetting slower private consumption as real wage growth moderates.
The comments come days after the government unveiled plans to cut income taxes for middle-income earners and raise corporate taxes for larger companies from next year. Finance Minister Andrzej Domanski said he expected a “slightly positive” reception of the proposed changes from rating agencies.
“This is very good news. In the agency’s view, the Polish economy remains strong, resilient, and well-diversified,” Domanski wrote on the X platform following the Fitch announcement.
“However, rating agencies are signaling risks to public finances. (…) Fitch explicitly states that the record number of presidential vetoes limits the ability to implement effective economic policy.”
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