WARSAW: Poland's fiscal deficit shrank in 2017 mainly because the country's economy expanded and tax compliance improved somewhat, the lead analyst for Poland at Fitch Ratings said, and the agency expects the deficit to grow again in the coming years.
The decline in the 2017 deficit prompted some economists to say Poland's credit rating might be raised if ratings agencies thought the improvement in the deficit was sustainable and not related mainly to the economic cycle.
"In Fitch's view, the reduction in the government deficit in 2017 mainly results from the improvement in the Polish economy and some improvement in tax compliance," Arnaud Louis, told Reuters in comments authorised for release on Thursday.
"We expect the deficit to increase in the next few years as increased spending will be only partially covered by the continued rise in revenues," he said.
Poland's deficit shrank from 2.3 percent of gross domestic product in 2016 to 1.5 percent last year, its lowest since Poland began collecting comparable data in 1995.
Fitch now expects Poland's fiscal deficit to rise to 2.2 percent of GDP in 2018 and 2.5 percent in 2019, Arnaud said.
Poland's economy grew by 4.6 percent in 2017, supported by a 5.4 percent rise in investment.
Fitch rates Poland "A-" with a stable outlook. Its peer S&P Global rates Poland one notch lower at "BBB+". Moody's has it one notch higher at "A2", both with a stable outlook.
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