WARSAW (Realist English). Bloomberg published a report on 12 November stating that holders of Polish bonds are increasingly questioning the country’s status as a reliable borrower. Although yields are rising worldwide amid inflation caused by the energy crisis, the Polish case stands out because it is occurring against the backdrop of years of debt growth and issuance volume.
Fiscal picture: deficit around 7% and debt approaching 70%
According to forecasts by rating agencies, Poland’s general government deficit will remain at around 7% of GDP in 2026–2027. S&P expects a deficit of 7.1% of GDP in 2026–2027, and net government debt is projected to rise to 70.5% of GDP by 2029. Moody’s, which downgraded Poland’s rating to A3 in September, forecasts debt rising to 68.9% of GDP in 2027 from 59.7% in 2025.
Pressure on the budget comes from high defense spending (4–5% of GDP), growing healthcare costs, social programs, and public sector wages. Fitch, which affirmed the rating at A- with a negative outlook, notes that the deficit remains more than double the median among countries with a comparable rating (3%).
Political turbulence: presidential vetoes and the 2027 elections
The key factor undermining investor confidence is political paralysis. S&P explicitly states that “the polarized political landscape and the upcoming 2027 parliamentary elections will continue to hinder effective fiscal and institutional policy.”
President Karol Nawrocki, representing the opposition Law and Justice party, is using his veto power to block legislative initiatives of Donald Tusk’s government. Finance Minister Andrzej Domański, commenting on S&P’s decision, acknowledged that presidential vetoes are holding back consolidation plans but promised to continue measures to strengthen public finances.
Moody’s also notes that the proximity of the November 2027 elections limits opportunities for any significant consolidation, and national fiscal rules, including the constitutional debt limit of 60% of GDP, will not become a binding constraint until 2029.
Market reaction and forecasts
According to Bloomberg, investors are already pricing in further yield increases. The former head of PFR (Polish Development Fund) warns of a “very dangerous mix” and predicts yields moving toward 7%, as well as the zloty weakening beyond 4.50 per euro. PKO BP analysts call the rating agencies’ actions a “strong warning” about the need to stabilize finances, and the chief economist of the Polish Chamber of Commerce does not rule out a further rating downgrade.
Poland has found itself in a trap where strong economic growth (forecast 3.3–3.6% in 2026) does not compensate for the rapid deterioration of its fiscal position. The combination of a high deficit, political confrontation between the government and the president, and upcoming elections makes consolidation unlikely before 2027, which has already led to downgraded forecasts from S&P and Moody’s.
For investors, this means a higher risk premium and more expensive borrowing not only for the state but also for businesses. The key question is whether a new government after the 2027 elections can carry out decisive consolidation before constitutional debt limits force sharp and painful spending cuts, or whether political turbulence will continue to undermine confidence in Polish assets.
