• On 27 March 2020 rating agency Fitch announced a decision about keeping Poland’s credit rating unchanged at the level of A-/F2 for long and short term liabilities, respectively, in foreign currency and A-/F1 for long and short term liabilities, respectively, in local currency.
• Rating’s outlook remained at a stable level.

Fitch rating agency in its press release justifying the decision indicates strong macro fundamentals and well diversified economy, underpinned by sound economic policy framework. Agency pointed that the epidemic will have a negative impact on Poland’s real GDP growth in 2020 (1.8%), however a V-shaped recovery is expected in 2021 (3.2%). Fitch forecasts fiscal deficit to GDP 5% in 2020 and 3.3% in 2021. According to Fitch general government debt to GDP ratio in 2019 will amount to 50.3% and increase to 54.3% in 2020 before declining to 52.1% in 2021. Also, in Fitch’s view Poland should be relatively resilient to the shock from the COVID-19 pandemic due to its diversified economy, a current account close to balance and some degree of fiscal space to accommodate expansionary fiscal measures.

Rating prospects

According to the agency, Poland’s rating could be raised as a result of an improvement in net external debt to GDP towards countries with ‘A’ category or fiscal consolidation that will lead to a sustained decline in public debt to GDP. Additionally, rating could be higher as a result of GDP growth supporting faster income convergence towards countries with ‘A’ category. On the other hand, rating could be lowered in case sustained increase in government debt, from a failure to consolidate public finances over the medium term, severe and sustained negative impact from the COVID-19 pandemic on medium-term GDP growth or the external finance. Rating could be also lower if governance standards or the business climate will lead to an adverse impact on the economy.