S&P cuts Poland’s local-currency debt rating and sets negative outlook

S&P Global Ratings lowered its assessment of Poland’s debt in the national currency and changed the country’s sovereign outlook from stable to negative, according to ZF. The agency announced the decision on November 6, the outlet reported. It cut the local-currency rating from “A/A-1” to “A-/A-2,” while leaving its ratings for foreign-currency debt unchanged at “A-/A-2,” according to ZF.

The rating agency cited deteriorating public finances, rapid growth in government debt and political difficulties that are holding back budget-consolidation measures, ZF reported. S&P expects Poland’s general-government deficits to average more than 6% of gross domestic product in coming years, according to the outlet. ZF reported that the agency expects the deficit to remain elevated over that period.

Spending pressures include military costs estimated at about 4% to 5% of GDP, as well as higher social spending and public-sector wage costs, ZF reported. The outlet said S&P views the country’s fiscal deterioration in recent years as among the most significant internationally.

Poland’s net public debt, measured after liquid assets are deducted, is projected to exceed 70% of GDP in 2029, compared with about 53% in 2025, according to ZF. Despite the fiscal concerns, the country continues to record economic growth faster than that of many European economies, the outlet reported.

The outlook change signals concern about the direction of Poland’s public finances, while the ratings for foreign-currency debt were not changed, ZF reported. The agency’s decision reflects both the fiscal pressures and the political challenges to measures aimed at containing deficits, according to the outlet.