S&P: Poland ratings unaffected

Standard & Poor's said that the stalling of coalition talks between the Law and Justice party and the Civic Platform would not have an immediate impact on the sovereign credit ratings on the Republic of Poland (foreign currency BBB+/positive/A-2; local currency A-/positive/A-2).

The agency emphasized, however, that it will monitor closely the ongoing efforts to form a new government in Poland, in particular the agenda of any new government.

S&P placed the ratings on Poland on positive outlook in March in recognition of the country's good economic prospects and gradual improvement in fiscal trends. The general government deficit (including the cost of pension reform) has been on a downward trend since its peak in 2004 and is projected to reach about 5% of GDP in 2006.

If fiscal trends can be maintained in the medium term, supported by credible economic and fiscal policy, the ratings on Poland could be upgraded within the coming year, S&P said. If the stalling of coalition talks signals a departure from reform-oriented policy, however, leading to a deterioration in fiscal indicators and delaying prospective entry into EMU, this would preclude an upgrade.

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