Fitch confirms Poland's rating at 'A-' with stable outlook

Andrew Gombert/PAP/EPA

Fitch has confirmed the long-term rating of Poland in foreign currency at 'A-' with a stable outlook, the global ratings agency said in a statement on Friday evening.

According to Fitch, Poland's rating offsets a diversified economy, stable economic growth in recent years and a sound macroeconomic framework, against governance indicators and income levels lower than rated peers.

"The Stable Outlook reflects the resilience of Poland's economy to the coronavirus shock, an expected boost to medium-term growth from next generation EU (NGEU) funds and our expectations that after deteriorating sharply in 2020, the budget deficit and public debt levels will both improve from 2021 as pandemic-support measures are wound down and the economy recovers," the agency said.

At the same time, Fitch upgraded Poland's short-term foreign currency IDR (Issuer Default Rating) to 'F1' from 'F2' due to its robust international liquidity position, according to the statement.

Fitch has also raised Poland's GDP growth forecast for 2021, 2022 and 2023. The Polish economy is expected to expand by 5.2 percent this year (4.4 percent previously), by 4.5 percent next year, and by 3.8 percent in 2023, with forecasts taking into account support from the Next Generation EU funds, the statement shows.

According to the agency, the reasons for the lack of approval to date of the Polish recovery plan by the EU are "largely political" and pose rather a risk of delay than of cancellation of Poland's tranche.

Fitch also expects Polish general government deficit at 3.8 percent of GDP in 2022 against the government's expectation of 2.8 percent, and at 3 percent in 2023.

Fitch last confirmed Poland's rating on March 19, 2021.

Among the three major rating agencies, Moody's gives Poland the highest rating, an 'A2.' According to Fitch and S&P Global Ratings, Poland's rating is 'A-.' All three give Poland a 'stable' outlook.

S&P will publish its new rating review for Poland on October 1, Moody's on October 29.