Polish Zloty: Budget risks point to further weakness versus Euro - Societe Generale

Societe Generale says Poland’s elevated fiscal deficit and rapidly rising public debt could keep pressure on the zloty, with the draft 2027 budget set to provide the next key test for investor appetite. The bank says further fiscal slippage could push the 10-year POLGB yield above 6% and EUR/PLN back toward 4.35. Fitch’s decision to maintain Poland’s A- rating with a negative outlook highlights the fiscal risks, despite the country’s large, diversified and resilient economy and the support provided by EU membership.

EUR/PLN seen at risk of renewed upside on fiscal concerns

"The country’s budget deficit, currently at 7.3% of GDP, is estimated to stay elevated and public debt is set to continue rise rapidly."

"In Poland, the government plans to keep budget broadly neutral by lowering income tax to middle class group and raising taxes on large companies from 2027."

"Appetite for zloty assets could be tested on Friday when PM Tusk’s government unveils the draft 2027 budget."

"Fitch maintained Poland’s rating at A-, with a negative outlook on Friday."

"The agency cited a large, diversified and resilient economy and a policy framework supported by EU membership."

"Fiscal slippage could nudge the 10y POLGB yield above 6% and EUR/PLN back towards the 4.35 resistance level."