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Moody's Downgrades Poland to A3 Amid Fiscal Deficits

By Markets Desk · 2026-09-19 · 1 min read
A tall stack of government treasury bonds
Illustration: Tradingbird

Poland's sovereign credit rating falls to A3 as fiscal deficits hit 7% of GDP, according to Moody's.

Moody's cut Poland's sovereign credit rating to A3 from A2 on Friday. The agency cited sustained deterioration in fiscal strength and large fiscal deficits. The general government deficit is projected to remain at 7.1% of GDP in 2027. This level represents one of the highest in the European Union. Rising funding costs have further weakened debt affordability metrics.

The downgrade reflects a material increase in the government debt burden. Poland continues to finance major defence, infrastructure, and social spending programmes. Finance Minister Andrzej Domanski stated the economy is growing rapidly. He noted that public finances require consistent strengthening. This process needs cooperation from all state institutions, including the President.

Fiscal Council Flags Debt Risks

Poland's Fiscal Council assessed the 2027 draft budget proposal. The council found no outlined measures to consolidate public finances. The risk of public debt exceeding 55% of GDP is rated as very high. Moody's expects the deficit to stay elevated at around 7% of GDP in both 2026 and 2027. This projection holds despite continued strong economic growth in the country.

Outlook Shifts to Stable

Moody's simultaneously raised Poland's outlook to stable from negative. The agency expects authorities to comply with fiscal rules. Faster fiscal consolidation is anticipated after the November 2027 election. These measures should help stabilize the debt burden later in the decade. The shift signals a potential path toward improved fiscal discipline in the coming years.

Political Gridlock Impacts Policy

Political tensions persist between the government and President Karol Nawrocki. In July, the President referred a windfall tax bill to the constitutional court. This bill targeted profits from oil and gas companies. The gridlock complicates the implementation of fiscal consolidation measures. Ministers emphasize that strong fundamentals support the country's long-term economic stability.

GN auto markets/bonds: sovereign debt reports confirm the rating change. The A3 rating remains investment grade but signals higher risk. Investors monitor Poland's debt trajectory closely. The combination of high deficits and political uncertainty defines the current fiscal landscape. The market awaits concrete steps for budget consolidation from Warsaw.

Based on reporting by brecorder.com, compiled by the Tradingbird desk.

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