Fitch Holds Poland at 'A-' but Warns on Fiscal Path

Fitch Ratings has affirmed Poland's long-term sovereign credit rating at 'A-', while keeping a negative outlook on the country's fiscal trajectory. The agency acknowledged Poland's resilient economy and strong external position relative to peers, but pointed to the absence of a robust fiscal consolidation plan as a key concern.

The affirmation comes as Poland's budget deficit reached 141.1 billion zlotys ($38.19 billion) by the end of July, up from 123.7 billion zlotys ($33.48 billion) a month earlier. Fitch now expects the fiscal deficit to narrow only marginally to 6.7% of GDP by 2027, a slight upward revision from its earlier forecast of 6.2%.

The agency flagged that revenue growth will be constrained by weaker economic expansion and a lower corporate tax rate for banks. It also noted that the scope for offsetting measures is limited by the risk of presidential vetoes, and that additional spending pressures could emerge ahead of elections.

Poland's economy grew 3.8% in the second quarter, up from 3.5% in the first quarter, matching expectations. Fitch projects GDP growth of 3.3% in 2026, supported by EU Recovery and Resilience Facility investments and elevated defence spending, though slower real wage growth is expected to temper private consumption.

The rating action follows the government's recent proposal to cut income taxes for middle-income earners and raise corporate taxes for larger companies starting next year. Finance Minister Andrzej Domanski has said he expects a "slightly positive" reception from rating agencies on the proposed changes.