Moody’s Investors Service has placed a negative outlook on Poland’s “A2” credit rating, citing a deterioration in the country’s public finances and concerns over the potential for increased government spending ahead of parliamentary elections in 2027. The rating agency warned that a failure to implement a credible fiscal consolidation plan could weaken the country’s financial stability and the effectiveness of its fiscal policy.
The negative outlook, announced on Friday, reflects a significant worsening of forecasts regarding Poland’s financial condition. Moody’s indicated that a lack of decisive fiscal consolidation could lead to a weakening of the state’s financial stability and the effectiveness of its policies. Key risks to fiscal forecasts and debt levels include the impasse between the government and President Andrzej Duda, and the likely increase in government spending before and after the 2027 parliamentary elections.
According to Moody’s, the rating perspective could be restored to stable if Poland presents a credible plan for fiscal consolidation, limiting the growth of public debt and improving debt servicing ratios. Reforms strengthening the independence of the judiciary and supporting economic development could as well have a positive impact on the credit rating.
Conversely, the rating could be downgraded if public debt increases and the ability to service it deteriorates significantly. The agency emphasized that failing to curb spending pressures in the coming years could permanently weaken the country’s public finances and fiscal policy effectiveness.
The assessment comes after both Moody’s and Fitch downgraded Poland’s credit rating outlook to negative in 2025, citing deteriorating public finances. Poland currently holds an “A2” rating from Moody’s, “A-” from both Fitch and Standard & Poor’s (S&P). S&P maintains a stable outlook, while Fitch shares Moody’s negative outlook.
Moody’s raised its forecast for Poland’s GDP growth in 2026 to 3.7% from a previous estimate of 3.2%, citing strong domestic demand and investment supported by EU funds. Economic growth is expected to slow to 3% in 2027 due to the phasing out of funds from the Recovery and Resilience Plan (KPO) and weakening consumption. The agency notes that risks to these forecasts are tilted downwards, primarily due to geopolitical tensions and potential energy price shocks.
The agency projects the government and local government sector deficit to fall to 6.6% of GDP in 2026, from 6.8% the previous year, and to 5.9% in 2027. However, public debt is expected to continue to rise, exceeding 70% of GDP by the end of the decade, compared to 55% in 2024 and 68% in 2027.
Moody’s also highlighted the potential impact of President Duda’s veto of the SAFE program, which could delay the disbursement of funds to Poland and limit their full utilization. The political impasse and the prospect of increased government spending before the 2027 elections are identified as key risks to the country’s fiscal outlook.
The rating agency acknowledged Poland’s strengths, including strong economic growth – with real GDP growth close to 3% – converging income levels with the EU average, moderate public debt, and solid debt servicing indicators. However, it warned that unfavorable demographic trends could limit GDP growth potential towards the end of the decade and increase fiscal costs related to an aging population.
Moody’s also pointed to geopolitical risks, including the potential for a worsening regional security situation and a possible reduction in US support. While a scenario involving armed conflict between NATO and Russia is not considered the baseline, any serious attack on Poland would result in an immediate and significant rating downgrade.
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