Polish presidential election result challenges fiscal reform and consolidation efforts - Fitch
Rating agency Fitch warns that Karol Nawrocki’s narrow presidential victory is likely to complicate Poland’s economic reforms and fiscal consolidation, increasing institutional clashes and political polarization amid growing fiscal deficits and reliance on EU funds, the agency said in a statement.
The recent Polish presidential election saw conservative candidate Karol Nawrocki, affiliated with the opposition Law and Justice (PiS) party, narrowly defeat Warsaw Mayor Rafal Trzaskowski, the pro-European candidate backed by Prime Minister Donald Tusk’s coalition, with 50.9 percent to 49.1 percent of the vote amid a high 71.6 percent turnout.
Fitch Ratings highlights that Nawrocki’s win will likely continue to challenge the implementation of the government’s reform agenda, exacerbating institutional conflicts already visible between the PiS-aligned presidency and Tusk’s administration.
"Since Tusk returned to office in December 2023, there have been a series of clashes between his government and PiS and officials appointed by that party including the Head of the National Prosecutors Office and the Governor of the National Bank of Poland. The outgoing President, PiS ally Andrzej Duda, has also vetoed or slowed key legislation," the agency stated.
Fitch notes that the governing coalition’s cohesion will be tested, especially with a parliamentary vote of confidence scheduled for 11 June. Although the government is expected to remain in power, increasing political considerations ahead of the 2027 parliamentary elections may reduce the scope for politically difficult reforms, including those aimed at fiscal consolidation.
"Poland's public finances have weakened in recent years reflecting expenditure pressures from defence, social spending, public wages, subsidies and debt servicing. The general government (GG) fiscal deficit widened to 6.6 percent of GDP in 2024 from 5.3 percent in 2023, surpassing both the government’s target (5.7 percent) and Fitch’s estimate (6.2 percent)," Fitch wrote.
The government’s medium-term fiscal strategy aims to reduce the deficit to 5.5 percent in 2025 and below 3 percent by 2028 to stabilize debt levels, relying on modest spending freezes and strong GDP growth. Fitch warns that political obstacles and legislative resistance could hinder these consolidation efforts.
"The strategy relies on several smaller-scale initiatives, nominal freezes on certain social spending programmes and strong GDP growth, meaning that additional consolidation measures may be needed to meet these objectives. These could be hindered by political considerations or legislative obstruction," it concluded.
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