JCR Assigned A- Ratings to JPY Bonds of Poland

Rationale

The ratings are primarily supported by the country’s diversified industrial structure that substantiates the largest economy in Central and Eastern Europe, favourable economic prospects underpinned by prudent economic and monetary policies, its expanded production capacity rendered by robust investment backed by foreign direct investment inflows and EU subsidies, and improved flexibility of the labour market. On the other hand, the ratings remain constrained by the continuing fiscal deficit and a large foreign debt.

The Polish economy currently slows moderately stemming from weaker domestic and external demand, but withstands the impacts of the European debt crisis relatively well. It will inevitably slowdown in 2012 and 2013 from 2011 and is expected to grow around 2% on stable domestic demand. The country’s financial system has kept its stability on the solid financial position of banks. On the back of stable political base, the current coalition government adopted effective fiscal consolidation measures. The general government fiscal deficit (ESA95) in 2011 narrowed to 5.0% of GDP from 7.9% in 2010. The government revised the target of fiscal deficit for 2012 and 2013 in September 2012, reflecting the decreased tax revenues and lower economic projection, to around 3.5% of GDP from an initial 2.9% in 2012 and 3.0% from 2.2% in 2013. JCR expects that the fiscal consolidation measures equivalent to 2.1% of GDP for 2012 and the structural pension reform implemented in 2012 are likely to contribute to further reduction of the fiscal deficit. Its already sizableforeign debt has kept growing in recent years, but its financing risk is largely mitigated by the presence of ample foreign exchange reserves and IMF’s Flexible Credit Line (FCL) as precaution. The government has already completed the 2012 financing plan and started financing for 2013.

Toshihiko Naito, Chief Analyst

Haruna Saeki, Analyst

Rating

Issuer: The Republic of Poland

Pledge: Attached

Other Covenants: Not Attached

Bond Administrator: Not Appointed

Foreign Currency Long-Term Issuer Rating: A- Outlook: Stable

Outline of methodology for determination of the credit rating is shown as "Sovereign and Public Sector Entities" (February

10, 2009) in Rating Policies on JCR's home page (http://www.jcr.co.jp).