Poland's Public Finances Under Scrutiny: Fitch Ratings Outlook

Poland faces scrutiny over public finances with debt levels unsettling analysts ahead of elections in 2027. Fitch Ratings revised its credit outlook to negative from stable due to rising borrowing, defense expenditure, and political polarization that could hinder deficit reduction. Poland's next rating announcement is slated for February 27.

Poland's financial stability is under examination as Fitch Ratings scrutinizes increasing debt levels ahead of the nation's 2027 elections. The agency, historically positive since 1995 with only a minor dip in 2016, downgraded Poland's credit rating outlook to negative from stable. This shift comes amid Poland's surging defense costs, social spending, and debt servicing expenses.

Fitch's analysts, including Milan Trajkovic, indicate the negative outlook might remain for one to two years. Scheduled for a potential adjustment on February 27, the next rating largely depends on Poland's ability to control its deficit, predicted to reach around 7% of output in 2025.

The agency highlights Poland's medium-term fiscal management as a focal point. Trajkovic notes the need for strict adherence to the EU council-approved fiscal plan, which aims to reduce net expenditure growth from 6.3% in 2025 to 3.5% by 2028, while maintaining economic growth and preventing fiscal slippages.

(With inputs from agencies.)