Standard & Poor’s agency downgraded Polish rating from A- to BBB +. The euro exchange rate on Friday, 15.01.2016, after 19.30 was nearly 4, 50 PLN and the Swiss Franc more than 4,10 PLN. Declines in the value of polish currency reached almost 10 cents. This is caused by Standard & Poor’s, which – for the first time in history – downgraded Polish rating.
“Since winning the election in October 2015, the new Polish government initiated various legislative measures that we believe undermine the independence and effectiveness of key institutions” – is the reason provided by S&P.
The Agency reports that can further reduce the ratings if they will notice further independence weakening of key institutions, especially the NBP.
“We could lower the rating if we saw further weakening the independence, integrity and effectiveness of key institutions, especially the NBP. In addition, we could lower the ratings if public finances have deteriorated more than our baseline scenario, with the deterioration of the balance of revenue and expenditure” – is also written in the report.
BBB+ rating situate Poland below Curacao, Botswana, Slovenia, Lithuania, Latvia and Malta and on the same level with countries that are still struggling with crisis like Thailand, Oman, Mexico, Peru, Aruba, Spain.
S & P decision has a negative impact on the perception of Poland, as well as the valuation of bonds and PLN. This may have also affected the real economy in the form of higher costs for businesses associated with fluctuations in the currency market. Also foreign investors can expect higher rates of return on Polish bonds, which would increase the cost of external debt service.