S&P Global Ratings has cut Poland's local-currency sovereign credit rating and moved the outlook on the country's ratings to negative, warning that widening budget deficits and rising public debt could limit Warsaw's room to respond to future economic shocks.

The agency announced the decision on Friday evening. It affirmed Poland's long-term foreign-currency rating at A-, but lowered the long-term local-currency rating from A to A- and cut the short-term local-currency rating from A-1 to A-2. The outlook on both long-term ratings was revised from stable to negative.

S&P said Poland had seen one of the most significant fiscal deteriorations globally, adding that political polarisation hinders fiscal consolidation. The agency forecasts the general government deficit at 7.1% of GDP in both 2026 and 2027, and projects net government debt rising above 70% of GDP by 2029, a rise of more than 20 percentage points over five years.

The agency also noted that parliamentary elections in 2027 make meaningful consolidation unlikely before then, and that the veto power of opposition-aligned President Karol Nawrocki constrains the government's agenda. Renewed tensions around the constitutional court could also weigh on policy predictability, S&P warned.

The decision follows similar moves by the other major agencies. Fitch already has Poland on a negative outlook, while Moody's cut the rating in September to A3, its lowest since 2002. Last year's deficit, at 7.3% of GDP, was the EU's second-highest, driven by defence spending after Russia's invasion of Ukraine and rising social spending.

Finance Minister Andrzej Domanski acknowledged the decision, noting S&P's point that presidential vetoes constrain the government, and said it would keep working to strengthen public finances. S&P still called the economy resilient, projecting growth averaging around 3% between 2027 and 2029.