Moody’s: Poland’s fiscal decisions “positive and negative”

Analysis by credit ratings bureau Moody’s has re-assessed recent decisions by the Polish government, and has offered both praise and criticism. In a statement released on Monday, Moody’s analysts assessed the possible consequences of the government’s decision to lower the retirement age. It predicted that the new law, introduced last Thursday, would increase the risk of Poland exceeding the three percent threshold of the deficit-to-GDP ratio – but not until 2018. “The (new law to) gradually raise the retirement age is negative for Poland’s rating, since it weakens public finances, negatively affects economic growth and will further deteriorate the credibility of the policy by Poland,” said the statement, which went on to mention that the ongoing constitutional crisis and tensions in relations with the EU reflected a change in the conduct of policy by Poland towards “less predictability and original solutions.” On the other hand, Moody’s indicated that timing of the law’s application (Q3 of 2017), combined with more efficient tax collection thus far in 2016, would mitigate negative effects of budget implementation for 2017. “Higher costs, removed through the fiscal effects of improved tax collection, which the government has achieved in the first 10 months of 2016 (resulting in a 6.6 percent increase in taxes in 2016)…had a positive influence on profits for the budget,” the statement said.