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Standard and Poor’s rating agency affirmed Poland’s credit rating with outlook raised to stable

Standard and Poor’s rating agency affirmed Poland’s credit rating with outlook raised to stable

Standard and Poor’s rating agency affirmed Poland’s credit rating with outlook raised to stable

Standard&Poor's rating agency affirmed credit rating of Poland. Outlook has been raised to stable.

On 2 December 2016 rating agency Standard&Poor's announced a decision about keeping Poland's credit rating unchanged at the level of BBB+/A-2 for long and short term liabilities respectively in foreign currency and A-/A-2 for long and short term liabilities respectively in local currency. Rating's outlook has been raised to stable.

Standard&Poor's rating agency in its press release justifying the decision indicates weaker concerns over Poland's key institutions as the main factor of raising outlook. One of the main arguments behind lowering rating in January this year were concerns of S&P's analysts over National Bank of Poland's independence. Ministry of Finance pointed to irrationality of this argument several times. Independence of the National Bank of Poland is undeniable, which was eventually noticed by S&P in today's press release. Agency admitted that current government activities do not pose any threat to NBP's independence.

Revised forecasts of GDP dynamics in following years has been presented in the press release. Agency lowered its projection for this year to 3.0%, simultaneously underling that lower GDP will not impact negatively public finances. Agency's analysts expect gradual accelerating of economic growth in the following years, as a consequence of higher investment activity due to faster utilization of EU funds. Higher consumption as a result of solid labour market, notably wage growth, will also be a significant contributor.

Rating agency foresees growth of budget deficit to 3.1% next year, which since then will be decreasing consequently to the level of 2.8% in 2019. At the same time the agency noticed that effects of improving tax collection are visible this year. S&P's forecast deviates only slightly from the MoF's general government sector deficit's projection in 2017. Public debt levels forecast by S&P in the following years are lower that MoF's projections included in The Public Finance Sector Debt Management Strategy in the years 2017-2020.

According to the Agency, Poland's rating could be raised as a result of faster decreasing of budget deficit or significant debt reduction. On the other hand, rating could be lowered in case of deterioration of public finances or renewed concerns over NBP's independence.
 

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