In brief

• S&P kept Poland's foreign-currency rating at A-, while it lowered the local-currency rating from A to A-.
• Both outlooks were changed to negative due to rising public debt and high defence spending.
• Economists warn that without repairing public finances after the elections, further rating downgrades are realistic.

The agency's decision and its scope

Poland's long-term foreign-currency rating remained at A-, while the local-currency rating fell from A to A- (Zawirowania wokół AI, szpiegowski cień nad Nvidią i ostrzeżenie dla Polski. PB RYNKI – Puls Biznesu). The outlooks for both ratings were changed from stable to negative. The decision was made on Friday evening.

Why the agency changed the outlook

According to S&P, rapidly growing debt may limit the government's ability to respond to crises and slow economic growth (Nasze zadłużenie niepokoi świat. Właśnie dostaliśmy poważne ostrzeżenie – WNP.pl). The agency forecasts that the deficit of the general government sector in 2025–2026 will average over 7% of GDP, and that net debt may exceed 70% of GDP by 2029. Among the causes, it cited high defence spending, reaching 4–5% of GDP.

The agency also points to political polarisation. In its view, presidential vetoes hinder the government's implementation of legislative plans and the restoration of public finances. Finance Minister Andrzej Domański believes the vetoes limit the possibility of increasing budget revenues, and he announced further actions to strengthen state finances.

The economy still supports the rating

A strong economy continues to help maintain the rating, but growth alone will not stop the deterioration of public finances – notes Jacek Jurczyński of Akcent CZ (S&P obniża perspektywę ratingu. "Polska gospodarka trzyma się lepiej niż budżet" – Business Insider Polska). Kamil Pastor of PKO BP considered the decision another signal that public finances require stabilisation (Kończy się cierpliwość agencji ratingowych. Polska musi ratować finanse publiczne – Business Insider Polska). Piotr Soroczyński of the Polish Chamber of Commerce (KIG) warns that raising financing on the debt market may become more difficult, and investors will demand higher yields (S&P tnie perspektywę ratingu Polski. Soroczyński, KIG: to może nie być koniec – Rzeczpospolita). Rafał Benecki of ING Bank Śląski called the decision a warning to all political groups just before the election campaign (Kolejny cios agencji ratingowych. Ekonomista: Żółta kartka dla całej sceny politycznej – Bankier.pl).

Economists at Credit Agricole warn that if public finances are not repaired after the parliamentary elections, further rating downgrades will become a realistic scenario. Experts also note that although the decision is not yet triggering an avalanche sell-off of bonds, it reinforces the market's belief in growing budget problems (Wiarygodność kredytowa Polski znów nadszarpnięta. Eksperci ostrzegają: lawina może w końcu ruszyć – Puls Biznesu).