FILE PHOTO: President of Poland Karol Nawrocki looks on as he and U.S. President Donald Trump (not pictured) meet in the Oval Office at the White House in Washington, D.C., U.S., September 3, 2025. REUTERS/Brian Snyder/File Photo

(Reuters) -Fitch Ratings revised Poland's outlook to "negative" from "stable" on Friday, citing growing risks to public finances as the key driver.

The agency flagged wider-than-expected deficits and a lack of credible fiscal consolidation plans, warning that political hurdles could delay reforms ahead of the 2027 parliamentary elections.

It now sees government debt climbing more steeply, approaching 68% of GDP by 2027.

President Karol Nawrocki's early vetoes and tax opposition reflect deepening political divides that could limit the coalition's ability to push through tough fiscal measures ahead of the 2027 elections, the agency said.

Fitch also noted that the implementation of reforms required to maintain EU funding will remain critical to maintaining strong GDP growth amid these challenges.

However, the agency expects real GDP growth of 3.2% in both 2025 and 2026, outpacing the 2.3% peer median, supported by resilient domestic consumption and stronger absorption of EU funds, which are seen offsetting the drag from U.S. tariffs on the eurozone.

While Poland's diversified economy and EU membership support its rating, failure to stabilize debt or improve fiscal discipline could trigger a downgrade.

Fitch affirmed Poland's issuer default rating at "A-".

(Reporting by Khusbu Jena in Bengaluru; Editing by Mohammed Safi Shamsi)