Fitch warns Poland on fiscal policy

By bne IntelliNews January 28, 2016

Fitch Ratings warned on January 27 that an increase in the deficit could trigger a cut to its rating of Poland.

The announcement echoes concerns expressed by Moody's in recent days, and comes in the wake of a surprise downgrade by Standard and Poor’s to BBB+ from A- and change of outlook to negative from positive. The move weakened the zloty and saw yields spike.

Fitch analyst Arnaud Louis told reporters that he expects Warsaw to keep the deficit below 3% of GDP in 2016 and 2017, according to Bloomberg. However, evident relaxation of fiscal policy has shifted the “balance of risks to the negative side,” he added. Fitch affirmed Poland at A- with stable outlook the same day of the S&P downgrade.

“If we were to see a policy announcement resulting in the deficit being higher, that would be a potential trigger for a rating downgrade,” Louis said. “At the same time we also forecast growth to continue to be strong, at 3.5% or higher.”

The Law and Justice (PiS) government won power in October with large spending promises. The flagship policy to boost child benefit is set to cost the budget up to PLN17bn in 2016, and over PLN20bn the following year.

To cover this, and other costs such as the lowering of the retirement age in the second half of 2016, the government plans to introduce a bank tax from February and a tax on retailers.

Read in IntelliNews Pro

Get IntelliNews Pro

Related Articles

Erdogan says Trump’s Gaza proposal not “to be taken seriously”, says Israel must pay for $100bn reconstruction

Turkish President Recep Tayyip Erdogan has rejected US President Donald Trump’s proposal to relocate Palestinians from Gaza as something not “to be taken seriously”, while at the same time ... more

Azerbaijan’s banking sector expands in 2024 with significant growth in loans, assets and investments

Azerbaijan’s banking sector demonstrated strong performance in 2024, with substantial growth in loans, assets and deposits across leading financial institutions. While most banks saw profitability ... more

World Bank must wake up to Rogun mega dam “nightmare” in Tajikistan, say activists ahead of financing vote

The World Bank has to realise that the Rogun mega project “dream of the biggest dam [in the world] will turn into a nightmare for the people and nature in Tajikistan and beyond” and that it ... more

Dismiss

Chat with usLiveChat