The Polish government’s plans to increase tax revenues and cut the budget deficit will have to be put into place before they can influence the country’s credit rating, Moody’s Investors Service said.
If implemented, the measures announced on Nov. 18 will boost the country’s competitiveness and credit worthiness, Moody’s analysts including Jaime Reusche in New York said in a weekly credit outlook today.
“The reforms will take time to produce tangible results, increasing the likelihood that they may be watered down or that support for them may wane under future administrations,” Moody’s said. “Despite carrying positive credit implications as economic benefits trickle in, the announced measures bear no immediate effect on the government’s A2 rating.”
Moody’s rates Poland A2, the sixth-highest investment grade and the same level as Italy, with a stable outlook.
In his first policy speech since winning re-election last month, Prime Minister Donald Tusk pledged on Nov. 18 to increase payroll levies, reduce tax incentives and raise social security contributions, boosting revenue and cutting the budget deficit to about 3 percent of economic output next year from 5.6 percent expected by the government in 2011.
The Polish government wants to cut public debt to 52 percent of gross domestic product next year and to 47 percent in 2015, when it plans a 1 percent budget gap, Tusk said.