Moody’s says Poland’s highest court ruling is negative for credit – The First News



Andrew Gombert / PAP / EPA

The ruling by the Polish Constitutional Court is straining relations with the European Union and is negative on credit, rating agency Moody’s said in its October 8 report.

The country’s Constitutional Court ruled on Thursday that several articles of EU treaties did not comply with the Polish constitution, calling into question the primacy of European Union law over national law.

According to Moody’s, the recent judgment of Poland’s highest court could lead to further delays in the disbursement of funds from the EU Stimulus Fund and lower GDP growth in 2022, which is negative for the credit profile of Poland.

Ursula von der Leyen, President of the European Commission, said on Friday she was “deeply concerned” by the decision of the Polish Constitutional Court and instructed the Commission services to analyze it “in a deep and rapid manner”.

She added that the EC would decide on its next steps after considering the Polish judgment.

The rating agency said in its October 8 report that the European Commission would delay approval of the national stimulus plan and advance “in depth” in 2022 to the payment of billions of euros in stimulus aid. EU in Warsaw.

The Polish judgment could also trigger a mechanism for the EU to withhold EU payments from the regular budget due to alleged rule of law violations, Moody’s added.

While the effects of such measures on real GDP growth in 2021 are negligible, they will weigh on GDP growth in 2022, according to the report.

Prolonged delays in disbursing funds from the EU Stimulus Fund could reduce GDP growth in 2022 to around 4% against Moody’s current forecast of 4.5%, the agency wrote.

At the same time, Moody’s experts do not believe that further deterioration of relations with the EU would lead to an increased risk of Poland leaving the EU.

Besides the economic benefits of EU membership, a large majority of Poles are in favor of staying in the bloc, the agency wrote.

Among the three major rating agencies, Moody’s has the highest rating in Poland. According to Fitch and S&P, Poland’s rating is “A-”. All three give Poland a “stable” outlook. Moody’s will release its new rating assessment for Poland on October 29.

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