Poland's economy will accelerate in 2006 thanks to a rise in investment and solid exports, but it lacks fiscal reforms needed to secure higher ratings, according to a Fitch analyst.
The rating agency's Poland analyst, Edward Parker, said Warsaw may miss the 2006 budget deficit target of 30.5 billion zlotys (€8 billion) despite improving macroeconomic performance and rising budget revenues.
"The macroeconomic outlook for Poland is very favourable. We expect economic growth to pick up to 4.2 per cent this year from below 4 per cent in 2005," said Mr Parker.
Fitch rates Poland's long-term foreign currency debt at 'BBB+' with a positive outlook and the Polish government has said it believes the country is ripe for an upgrade.
But Mr Parker said Fitch saw no fiscal improvements since it placed Poland on the positive outlook in March 2005 and doubts remained whether this year's budget plan was feasible.
The parliament recently handed the conservative cabinet its first major defeat, adding to the already stretched 2006 budget another 1.5 billion zlotys in family support spending.
The lower house is due to take a final vote on the budget mid-January.
Mr Parker said fiscal reform was key for ratings given that Poland's budget deficits have averaged around 5.5 per cent of GDP since 2001, while public debt has climbed from 38 per cent of GDP to 48 per cent.
He said the fact that last year's general elections produced a minority government added to uncertainty, raising doubts whether necessary budget reforms could be pushed through at all, given their unpopular nature.