Country Governance Briefing: Poland's veto standoff meets a fiscal downgrade

Poland enters the last year of its parliamentary term with its two elected centres of power working against each other. President Karol Nawrocki, aligned with the right-wing opposition, had within ten months of taking office vetoed more bills than any previous president over a full term, Notes from Poland reported, and relations between the presidency and Prime Minister Donald Tusk's coalition have reached "unprecedently low levels", according to its pre-election explainer of 15 October.

The constitutional calendar sets the frame. The current term began on 13 November 2023, so the election must fall on a non-working day in the last 30 days of the term, which leaves 17, 24 or 31 October or 7 November 2027, and the president must set the date at least 90 days before the term ends, the explainer says. The 460-seat Sejm is elected by proportional representation with a 5 per cent threshold for parties and 8 per cent for coalitions; the 100-member Senate by first past the post. Both chambers are controlled by the ruling coalition. The Senate approves the heads of the Supreme Audit Office, the Institute of National Remembrance and the Commissioner for Human Rights, and must consent to presidential referendums; it has twice this year blocked Nawrocki's proposal for a referendum on EU climate policies.

Open reforms

• Public finances. The government's draft budget for 2027 puts the deficit at 7.1 per cent of GDP, almost double the 3.7 per cent it had committed to reach by that year, Notes from Poland reported. The 2025 deficit was 7.3 per cent of GDP, second in the EU only to Romania's, according to Eurostat's deficit data, and government debt reached 61.6 per cent of GDP in the first quarter of 2026, above the 60 per cent reference value in EU law, Eurostat's quarterly series shows. Finance Minister Andrzej Domański said strengthening public finances "requires cooperation from all state institutions, including the president", who has obstructed some fiscal measures, among them a windfall tax on fuel companies.
• Migration law. The interior ministry withdrew a proposed amendment that would have made it a criminal offence, punishable by up to three years in prison, to knowingly enable or facilitate a person's illegal stay in Poland even without financial or personal benefit, Notes from Poland reported on 16 October. Human rights groups and the family ministry had objected that it could criminalise humanitarian aid at the Belarus border. Facilitating an illegal stay for benefit remains punishable by up to five years.
• Consumer contracts. The competition and consumer authority, UOKiK, is using its powers to set the terms on which banks may change contracts. On 15 October it fined Bank Pocztowy, Erste Bank Polska, ING Bank Śląski and Plus Bank a total of PLN 147.09 million for unfair clauses that let them change existing agreements and raise or introduce fees, its decision release says. One challenged clause allowed fees to rise by as much as 200 per cent after a 0.30 percentage point increase in inflation. The decisions are not final and can be appealed to the Court of Competition and Consumer Protection.

Court and regulator actions

• Bank fines in detail. The UOKiK fines were PLN 80.68 million for Erste Bank Polska, PLN 63.25 million for ING Bank Śląski, PLN 2.71 million for Bank Pocztowy and PLN 453,000 for Plus Bank, two per bank, one for variation clauses and one for fee clauses, covering accounts, cards, loans and mortgages, according to the authority.
• Rating action. Moody's lowered Poland's rating from A2 to A3 on 18 September, the first downgrade by any of the three large agencies since 2016, and said "political constraints, including the continued standoff between the government and the president and the proximity of the November 2027 parliamentary elections, also limit the scope for meaningful fiscal consolidation", Notes from Poland reported. The agency also cited a "limited willingness or ability" to rebuild fiscal buffers.

Programme conditions

Poland's binding external conditions come from the EU. The Council opened an excessive deficit procedure against Poland and six other member states on 26 July 2024, its press release shows, and Poland then set out a plan to bring the deficit below the 3 per cent limit, Notes from Poland reported at the time. The deficit has since risen rather than fallen, and the 2027 draft budget keeps it at 7.1 per cent. The gap between the 2024 plan and the 2027 draft is the figure any EU assessment of Poland's progress will turn on, and Moody's has now tied the fiscal path explicitly to the political standoff.

The domestic politics set the limits. Polls compiled by eWybory and Politico Europe show the parties aligned with the government at around 47 per cent and the right-wing opposition at around 48 per cent, with two coalition partners, the Polish People's Party and Poland 2050, polling below the 5 per cent threshold, the explainer says. A hung outcome and a repeat election, which has never happened in Poland, are possible.

What to watch: the Sejm's passage of the 2027 budget and any presidential veto of its accompanying laws, the Commission's autumn assessment under the excessive deficit procedure, appeals against the UOKiK decisions and the election date the president must announce next year.