A fair day for Poland. The conflict with the EU may again cause hiccups

Poland waits rather calmly for the doomsday. Experts do not expect the Fitch agency to decide to lower Poland’s rating or even its outlook. Currently, the Polish debt is “A-” from Fitch with a stable outlook.

Fitch decides, economists do not predict change

A decision other than keeping the Polish rating and its outlook at the current level would be a sensation. Fitch hasn’t messed with our rating since 2007. Yet economists like one husband are pointing to an important point.

We expect the rating to be maintained and its stable outlook. Possible comments on the impact of the conflict with the EU on Poland’s credit risk profile will be of key importance from the market point of view

– believe economists at PKO Bank Polski.

We do not expect any changes. However, the set of risks will certainly include an aspect of the National Reconstruction Plan

– mBank economists write.

Due to the solid economic foundations, the highest probability is attributed to the scenario of maintaining the rating and its stable outlook. In the announcement, however, the agency may draw attention to the growing risks related to the lack of material evidence to resolve the conflict on the rule of law with the EU, the prolonged acceptance of the European Commission for the National Reconstruction Plan and the overall worse institutional assessment of Poland.

– Bank Millennium economists write.

Fitch shook a finger already

Thematically, at least for me, relations with the EU are one of the most important issues [z punktu widzenia ratingu Polski – red.]. It is in Poland’s particular interest to resolve the situation with the EU. Poland has to rely to a fairly large extent on EU funds, not only on the Reconstruction Fund, but also on cohesion funds

– said in January the chief analyst of the Fitch rating agency for Poland, Arvind Ramakrishnan, quoted by. He added that “it is important to consider the effects of an event with a low likelihood of occurrence but with a potentially serious impact.”

Another key rating agency, Moody’s, also warned Poland in January.

The announcements of the European Commission about the possibility of suspending the payment of financing for Poland are negative for the country’s credit profile

– experts from Moody’s wrote. It was before February 16 this year. The CJEU issued a judgment unfavorable for Poland (and Hungary) on the conditionality mechanism in the payment of EU funds. Earlier, on January 19, the European Commission announced that it could start withholding financing from the budget for Poland until the country complies with the payment of fines related to the CJEU judgments.

The deepening dispute with the EU may limit access to much more financing in the future, and may also weaken investor sentiment, which in both cases could affect Poland’s economic growth prospects from 2023.

– believes the agency cited by

Poland’s rating also under the microscope in April

Fitch’s decision begins the winter-spring “season” of reviewing the Polish rating by the most important rating agencies. On April 1, he will do S&P, and Moody’s on April 29 this year.

According to the latest information, agencies see, inter alia, solid foundations of the Polish economy, but if they believe that the growing conflict between Poland and the EU threatens our credibility, they may lower the prospects of our credit rating (or, in an extreme case, even the rating itself). And this would be a signal for investors to demand more attractive terms of the Treasury bonds to be issued from the Polish government. In a word – Polish debt would be more and more expensive. Additionally, it would be a weakening factor for the zloty.

It is worth recalling that in January this year. The outlook for the Polish rating was lowered to negative by the little-known German rating agency Scope Ratings. Reason? Again, among other things, “the long-term trend of weakening government institutions” and “the constantly growing tensions between the Polish government and the EU, calling into question the predictability of EU funding.”

Markets do not care too much about the opinion of Scope Ratings, but if large agencies began to look at the matter in a similar way, the matter would become really serious.

Dudek: rating agencies can dare

That sooner or later credit rating agencies, seeing the growing conflict between Poland and the European Union and the lack of prospects for launching the National Reconstruction Plan, will start looking less favorably at Poland’s creditworthiness.

According to most forecasts, Poland’s economic growth will decline. There are forecasts that it will be below 3%, this is already a sharp braking. And if there are no standard EU funds, not to mention KPO, growth will be really threatened. The rating agencies, in my opinion, will not stick around anymore

– said Dr. Sławomir Dudek, vice president and chief economist of the FOR foundation in “Business Studio”.

The sources of growth are dying out – we have a demographic crisis, we have one of the highest inflation in the EU, investments are in a total pit. I am not talking about public finances anymore, and EU funds give them a huge breath

– added Dudek.