UPDATE 1 — Moody's cuts Poland's ratings on deteriorating fiscal strength

(Updates with details and background throughout) Sept 18 (Reuters) — Credit ratings agency Moody's downgraded Poland's sovereign rating to 'A3' from 'A2' on Friday, citing sustained deterioration in the country's fiscal strength. The downgrade comes as Poland continues to finance major defence, infrastructure and social spending programmes while maintaining some of the highest fiscal deficits in the European Union. "Large fiscal deficits have led to a material increase in the government debt burden and, together with rising funding costs, have weakened debt affordability metrics," Moody's said. In late August, Finance Minister Andrzej Domanski while presenting the draft budget said the country expects its general government deficit to remain at 7.1% of GDP in 2027. Poland's Fiscal Council said on Monday the government's draft budget proposal for 2027 did not outline measures to consolidate public finances and the risk of public debt exceeding 55% of GDP was very high. "We expect the general government deficit to remain elevated at around 7% of GDP in both 2026 and 2027 despite continued strong economic growth," Moody's said. However, the agency raised Poland's outlook to 'stable' f