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Fitch affirmed Poland’s rating at “A-“.

Fitch affirmed Poland's rating at "A-".

According to the agency, the current level of long-term foreign currency rating compensation is balanced on the one hand by a diversified economy, stable economic growth in recent years and a strong macroeconomic framework, and on the other hand, governance indicators and income levels below the rating basket. .

“The stable rating outlook reflects the Polish economy’s resilience to the pandemic-related shock, the expected support for economic growth from the EU Reconstruction Fund, and the agency’s forecast that after a strong deterioration in the budget deficit and public debt levels in 2020, both indicators will improve in 2021.” – added.

There are systematic reasons for increasing the short-term foreign exchange rating – improving Poland’s international liquidity position.

Fitch forecasts that the deficit in Poland’s general government sector in 2022 will reach 3.8 percent. gross domestic product. The draft budget for 2022 includes a 2.8% deficit.

The agency raised Poland’s 2021 GDP growth forecast to 5.2 percent. From 4.4% to 4.5% in 2022 and to 3.8% in 2023.

The main factors that may lead to a rating upgrade are:

– fiscal consolidation in the medium term, which leads to a permanent decrease in the ratio of public debt to GDP;

– the continuous improvement of the country’s external finances, including a further decrease in the ratio of net external debt to GDP;

Sustainable GDP growth that supports faster revenue convergence with the A-rated average basket, backed by macroeconomic policies that do not lead to the risk of economic overheating, such as persistent high inflation, C/A deficits or asset bubbles.

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Among the most important factors that could lead to a rating downgrade, Fitch cites:

– a persistent increase in government debt, such as a failure to consolidate public finances, the realization of contingent liabilities or a slowdown in economic growth in the medium term;

Deterioration of governance standards or the business climate, which will have a negative impact on the economy.

Fitch launched a round of reviews of Poland’s ratings by major agencies in the second half of the year – on October 1, Poland’s credit rating will be examined by S&P Global Ratings and on October 29 by Moody’s.

Among the three largest rating agencies, Moody’s has the highest credit rating for Poland – at the “A2” level. Poland’s rating according to Fitch and Standard & Poor’s is “A-“, a level lower than Moody’s. Prospects for all assessments are stable.

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