Poland’s Local Debt Rating Cut to A-/A-2 as Deficit Exceeds 7%
Key Facts
On November 6, 2026, S&P revised Poland’s rating outlook from stable to negative and simultaneously cut its long- and short-term local-currency ratings from A/A-1 to A-/A-2. The agency kept its foreign-currency rating at A-/A-2, according to Poland’s Finance Ministry. The decision therefore focused on domestic debt, while the external debt rating remained at its previous level. The outlook revision alongside an actual cut to the local rating signaled growing concern about the fiscal trajectory. The ministry said the agency issued the decision on that date.
S&P forecast that the general government deficit would remain above 7% of GDP through 2027, extending fiscal pressures over the coming years. The ministry, relaying the agency’s estimates, said the deficit would remain high, without providing a more precise figure for each year’s forecast. The agency linked the persistence of imbalances to constraints on the government’s ability to implement sufficient fiscal consolidation. S&P said the 2027 election could limit measures to cut spending or raise revenue as the vote approaches. That puts the deficit trajectory at the heart of the reasons for the negative outlook, alongside the expected rise in debt.
On debt, the agency forecast that general government net debt would rise above 70% of GDP by 2029, compared with 53% in 2025. S&P described the deterioration in public finances as among the sharpest globally and estimated that net debt would increase by more than 20 percentage points of GDP over five years. This trajectory reflects an expected widening of the gap between revenue and spending, increasing the rating’s sensitivity to the government’s ability to halt the accumulation of liabilities. The agency also said political polarization could complicate the fiscal response, as Poland needs gradual steps to contain the deficit. It warned that continued imbalances and rising debt could lead to a downgrade if they weakened growth through declining investor confidence, higher funding costs or an abrupt fiscal adjustment.
Still, S&P does not expect the Polish economy to contract, forecasting real GDP growth of about 3% a year in 2027–2029 and viewing this performance as supportive of the rating. In its previous review, published in May 2026, the agency maintained a stable outlook and the local rating at A/A-1, the level cut in the November decision. The Finance Ministry’s statement on that review said the deficit reached 7.3% of GDP in 2025, with growth forecast at 3.3% in 2026 and 2.9% in 2027. The ministry also cited higher savings, economic diversity, flexible labor and product markets, and the availability of non-debt external financing as resilience factors. This background shows that the agency’s current warning concerns deteriorating public finances, while growth prospects and resilience factors remain part of the credit picture.
S&P said the outlook could return to stable if the government took lasting and clear steps to gradually reduce the large deficit and cut debt, while avoiding severe damage to growth. Conversely, it tied the possibility of a downgrade to the risk that persistent fiscal imbalances and political polarization could undermine growth and investor confidence or raise borrowing costs. In its previous review, the agency said weaker medium-term growth caused by economic imbalances or external shocks could put pressure on the rating. The external risks it cited at the time included rising geopolitical tensions, including an expansion of the Russia-Ukraine war and its impact on public finances. The government’s ability to reduce the deficit and debt without weakening growth will remain central to the rating trajectory outlined by the agency.