Standard & Poor’s Ratings Services has assigned its ‘BBB+’ long-term foreign currency senior unsecured debt rating to the US$1bn bond due in 2014 issued by the Republic of Poland (foreign currency BBB+/Negative/A-2; local currency A/Negative/A-1).
The rating on the issue reflects the ‘BBB+’ long-term foreign currency issuer rating on the republic. The factors supporting the ratings on Poland include a manageable external liquidity position, as well as a competitive, resilient, and increasingly diversified export sector that is expected to lead the country’s incipient economic recovery.
However, the ratings remain constrained by the need to implement fiscal reforms sufficient to prevent a further deterioration of fiscal indicators. In the absence of far-reaching fiscal reforms, Standard & Poor’s projects a widening of the general government deficit to more than 7% of GDP in 2004-05, and a rapid increase in the debt-to-GDP ratio, to more than 60% of GDP by 2006. This would, in addition, delay Poland’s EMU accession to beyond 2010.