Poland’s general government deficit will rise to 4.9% of GDP this year and decline to 4% of GDP in 2024, Moody’s Investors Service said. Debt-to-GDP will rise to 52% in 2024.
We forecast a general government fiscal deficit of 4.9% of GDP in 2023 and around 4% in 2024, with the debt-to-GDP ratio rising to around 52% next year, from 49.1% in 2022. However, the government’s plans point to upside risks to our forecasts, according to the Credit Outlook report.
The agency expects the deficit to fall below 3% of GDP from 2025 onwards, limiting the increase in the debt burden to well below 60% of GDP in line with the EU’s Stability and Growth Pact.
Referring to the 2024 draft budget, Moody’s stresses that it contradicts EU fiscal rules limiting the budget deficit to 3% of GDP, which, once lifted as part of a general post-pandemic escape clause, “will be back in force from next year and therefore have the potential to further strain an already contentious relationship with the EU”.
Rising deficits will increase Poland’s debt burden to 54% of GDP according to the draft budget, which is a negative factor for the credit rating, but we expect deficits to fall from 2025 onwards, according to the report.
Source: Moddy’s and ISBnews
