Standard and Poor's affirms Poland's rating

Standard & Poor's said Tuesday it had affirmed Poland's 'A-/A-2' long- and short-term foreign currency and 'A/A-1' long- and short-term local currency sovereign credit ratings. The outlook remains stable, it said and "the transfer and convertibility assessment is unchanged at 'A+'." Poland's "commitment to continued fiscal consolidation and its monetary flexibility, with its floating exchange rate enabling Poland's resilient economy to adjust to external shocks," were behind its decision. The affirmation came as the Polish zloty on Tuesday traded at its strongest rate against the euro in a year. "Poland's relatively high levels of government debt, comparatively low per capita GDP, and large external financing needs," were however points to watch, S&P said. Buoyed by a fiscal stimulus package, the country of 38.2 million was the only member of the 27-state EU to avoid a technical economic contraction in 2009, S&P noted. "However, given that general government debt under the national definition has exceeded the first legal threshold of 50 percent of GDP since 2010, the authorities now have less fiscal flexibility than in the past," the ratings agency said. "This leaves the economy -- and public finances -- vulnerable to any severe downturn in its major eurozone trading partners," it added. It pegged a 2.3 percent expansion in output for 2012, on lower demand both at home and abroad but forecast a pick-up in the coming years as global markets recover. "Fiscal policy should become less of a drag on growth once Poland reduces its budget deficit to within 3.0 percent of GDP, which we expect will happen in 2013," S&P said. It could revise its growth forecast upward "if the government pushes through with its structural reform agenda, including deregulating the labour market further, and streamlining and reducing business regulation."