Poland’s A2 rating reflects EU integration

In its annual report on Poland, Moody's Investors Service says the country's A2 rating and stable outlook are supported by integration with the European Union and the likelihood of continued economic growth.

"Poland's medium-term prospects for economic growth coupled with the beneficial consequences of completed structural reform and incorporation into the European Union make the rating outlook stable," said Moody's Vice President Jonathan Schiffer.

Poland's debt maturity structure is favorable and its debt-servicing requirements are manageable, the analyst added. The country recently concluded negotiations with some members of the Paris Club to allow prepayments and debt swaps that lengthen debt maturity structure and lower debt servicing costs.

The country's finances also benefit from high foreign-currency reserves, and its current account deficit is manageable, though an appreciating currency could lower export performance in future, the ratings agency said.

The presidential and parliamentary elections at the end of October are likely to result in a new center-right government, said Mr. Schiffer.

The primary tasks before the new government will be to implement structural reforms to make fiscal-deficit reduction less dependent on growth-induced revenue boosts or one-off privatization proceeds, to lessen social welfare benefits, and to deregulate labor markets in order to lessen Poland's high unemployment rate.

The rating agency's report, "Poland 2005 Credit Analysis," is a yearly update to the markets and is not a rating action.

(Source: Financial Mirror)

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