The S&P rating agency has made a decision regarding Poland

"Poland's budget situation will remain exceptionally weak in the coming years"

"The negative outlook reflects the risk that the increased budget deficit and growing public debt could limit policy flexibility in the face of future shocks. This could expose Poland to changes in investor sentiment or force a sharp fiscal adjustment that would weigh on economic growth," S&P wrote in the report.

"We expect that over the next two to three years, the Polish economy will continue to grow at a rate of around 3%, supported by strong domestic demand and exports. Nevertheless, Poland's budgetary situation will remain extremely weak in the coming years; we forecast that the average general government deficit will exceed 6% of GDP, and the net debt of the general government sector will reach 70% of GDP by the end of the decade, with political polarization making fiscal consolidation difficult," it added.

What do the indicators depend on?

The agency may downgrade Poland's rating if persistent fiscal imbalances and debt growth, with complications related to political polarization, would result in increased risks to economic growth through lower investor confidence, higher borrowing costs or strong and forced fiscal adjustment.

The lower rating could also result from a possible escalation of Russia's war with Ukraine, which could put pressure on Poland's public finances and growth prospects, amid heightened security risks.