Scope Ratings reviews its ratings either yearly, or at least every six months in the case of sovereigns, sub-sovereigns and supranational organisations. Monitoring reviews are unrelated to the calendar that outlines public finance rating actions.

Scope performs monitoring reviews to determine whether outstanding ratings remain proportionate. Monitoring reviews are conducted either by performing a portfolio review in terms of the applicable methodology/ies, latest developments, and the rated entity’s financial and operational aspects relative to similarly-rated peers; or through targeted reviews on an individual credit. Scope publicly announces the completion of each monitoring review on its website.

Scope completed the monitoring review for Poland (A+/Stable; S-1+/Stable) on 15 July 2021. This monitoring note does not constitute a rating action nor does it indicate the likelihood of a credit rating action in the short term. The latest information on the credit ratings in this monitoring note along with the associated ratings history can be found on www.scoperatings.com.

Key rating factors

Poland’s long-term A+/Stable ratings are underpinned by the country’s strong macroeconomic fundamentals and credible fiscal and monetary policy frameworks, supporting comparatively low economic volatility and reduced external sector risk. Poland’s economy has proven comparatively resilient over the Covid-19 crisis since 2020, with the crisis disproportionately weakening services more than industry, construction and retail trade. Poland benefits from a profitable, liquid, and well-capitalised banking sector as well as solid public finances, providing space for a significant and effective fiscal and monetary response in support of the healthcare sector, businesses and households. These elements, combined with the unprecedented EU-wide fiscal and monetary response to the crisis, underpin Scope’s opinion that Poland remains well positioned to weather the Covid-19 crisis and is expected to post strong growth over 2021 and 2022. Against these credit strengths, the ratings consider structural challenges as reflected in i) a comparatively low savings rate, mirroring the low investment rate of the Polish non-financial corporate sector, which is dominated by labour-intensive small and medium-sized enterprises; ii) growing budgetary pressures that weigh on public finance strengths, also in view of demographic decline, substantive social spending programmes and a weak social infrastructure; and iii) political headwinds in interactions with the EU alongside polarised domestic political conditions.

The Stable Outlook represents Scope’s view that risks to the ratings over the next 12 to 18 months are balanced. The ratings/Outlooks could be downgraded if, individually or collectively: i) a global or regional shock resulted in substantive deterioration of output and enhancement of external-sector risk; ii) weakening in fiscal discipline resulted in significant deterioration in the outlook for debt sustainability; and/or iii) governance risks intensified, possibly increasing risk to Poland’s EU fund inflows.

Conversely, the ratings/Outlooks could be upgraded if, individually or collectively: i) significant structural reforms were observed, raising the medium-run economic growth outlook; ii) fiscal performance improved, resulting in significant decline in public debt/GDP; and/or iii) the country’s external balance sheet were strengthened.

For the updated scorecards accompanying this review, click here.

The methodology applicable for the reviewed rating(s) and/or rating Outlook(s) (Sovereign Ratings, 9 October 2020) is available on https://www.scoperatings.com/#!methodology/list.
This monitoring note is issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0.
Lead analyst: Dennis Shen, Director

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