Ratings agency Moody’s issued a comment saying that the planned pension system overhaul should have an overall positive effect on Poland’s public finances.
“We estimate that the changes, including the asset transfers of workers within 10 years of retirement, will push debt levels down by at least 8.4% of GDP and perhaps as much as 9.2% of GDP, in addition to decreasing annual government financing needs by approximately PLN 20 billion in 2014-17,” Moody’s analyst Jaime Reusche wrote.
“Overall, the fiscal framework will derive significant benefit from the changes even as longer-term concerns (including increased contingent liabilities and unfavorable perceptions about respect for long-term investments) remain,” he also wrote.
“If the reform is passed, the government’s debt metrics will become more comparable to those of other sovereigns that have not borne the fiscal costs associated with the pension reform originally undertaken by Poland in 1999. Although investor sentiment may have recently been somewhat negatively affected by the proposed pension changes, a prudent mix of consolidation measures and support for the economy since 2010 have preserved fiscal-policy credibility,” the Moody’s statement read.
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