S&P analyst: Polish gov't policy could have 'negative impact' on public finances
PR dla Zagranicy
Roberto Galea
07.12.2016 11:04
An associate director at ratings agency Standards & Poor's has said that the economic policies of the Polish government could have a negative impact on the country's public finances in the long term.
Photo: Flickr.com/Chris RubberDragon
Since coming into power in October 2015, the Law and Justice (PiS) party has introduced a number of changes that impact state coffers, including introducing a PLN 500 (EUR 116) payout to families, as well as lowering the retirement age to 60 years for women and 65 for men.
Standard & Poor's on Friday decided to keep Poland's rating unchanged at BBB+ but raised the country's outlook to stable.
Asked if the decision to lower the retirement age in Poland could affect the country's credit rating in the future, Felix Winnekens, who is in charge of Poland's rating, said that the change could have a "negative impact" on public finances in the long term, adding that the step by the government "did not result in a change in the rating in the [latest] update."
Winnekens said that the "basic assumption" of the agency, is that the "reform will have a negative impact on public finances”, speaking to the PAP news agency in a interview published on Wednesday.
In the short term, the retirement-age reform "does not affect the rating", he said, adding that S&P is "more concerned about the general trend".
"We believe that government's policy could adversely affect the long-term sustainability of public finances, which is also connected with the retirement age reform.”
Two-year outlook
He said that S&P generally works on a two-year outlook, adding that currently this does not take into account a "potential negative impact of pension reform on public finances and the deficit beyond that timeframe".
“However, we believe that the revocation of the previous solutions will carry long-term repercussions, but it is difficult to calculate what it will cost the budget. In our two-year timeframe, however, we have already taken into account the retirement age reform,” he said.
In January, the agency lowered Poland's rating to BBB+ from A- and changed its outlook to negative. The move sparked anger in Warsaw, with the Polish finance ministry calling the decision “incomprehensible”. (rg/pk)