S&P’s downgrade of Poland was well-founded

There has been much wailing from certain quarters that S&P’s January 15 downgrade of Polish foreign-currency debt from A- to BBB+ was motivated by “politics” and had nothing to do with Poland’s economy.

This argument does not make sense, and would still make none if “politics” were magically divorceable and insulable from “the economy” in the real world.

A credit rating is principally a risk assessment. Trust in a country’s government bears on the risk of lending to it. A one-party cabinet that started out by meddling with the constitutional court and seizing control of state media cannot be trusted to prudently run the state’s finances. It is particularly relevant when the ruling party has the irrepressible instincts (if none of the looks) of a Big Spender, even though it’s more likely a Tax-and-Spender than a Deficit-Spender.

In other words, if Kaczynski, Szydlo and Duda think nothing of breaking the constitution, what’s there to stop them from breaking the 3% deficit rule? Their other shenanigans – for instance, president Duda’s legally dubious pardon to Mariusz Kaminski, convicted of corruption and now heading Poland’s police and intelligence services – are merely business as usual in Eastern Europe. Challenging the separation of powers is not.

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