(Reuters) - Credit ratings agency Moody's lowered Poland's outlook to "negative" from "stable" on Friday amid rising spending pressure and political gridlock.
"Our decision to change the outlook to negative reflects a materially weaker outlook for fiscal and debt metrics compared to our earlier expectations," the agency said in a statement.
Poland's economy has remained resilient, supported by domestic demand and EU funds, with trend real GDP growth near 3%, although a standoff between the government
and the president risks slowing reforms and EU funds absorption.
"The outlook could return to stable if Poland enters a credible path of fiscal consolidation, significantly slowing down the growth of the public debt burden," the Polish finance ministry said.
Fitch also lowered Poland's outlook to "negative" from "stable" this month, warning of wider-than-expected deficits and limited room for credible fiscal consolidation ahead of 2027 elections.
The government in August raised its 2025 deficit forecast and projected only a modest fall next year as growing social spending, debt servicing costs and defence purchasing hamper efforts to rein in the budget shortfall.
Moody's affirmed Poland's long-term issuer and senior unsecured ratings at "A2" saying they reflected the geopolitical risks from Russia's war in Ukraine, and lower engagement by the United States in European security.
"Those risks are mitigated by Poland's NATO membership and its significantly increased self-defence capabilities," the agency said.
(Reporting by Khusbu Jena in Bengaluru, Karol Badohal and Marek Strzelecki in Warsaw; Editing by Alan Barona, Kirsten Donovan)
