WARSAW -  Global ratings agency Moody's on Saturday lifted its outlook for Poland to stable from negative, a decision that reflected "reduced risks of loose fiscal policy" by its populist rightwing government.

Moody's left unchanged its A2 investment grade for the EU's largest eastern economy that has yet to join the eurozone. The change reverses the agency's May 2016 downgrade to negative, its first in over a decade. The agency said the improved outlook was due to reduced fiscal risks, with the deficit in line with "the 3.0 percent of GDP limit and public debt stabilising at or near the current level of 55 percent of GDP."

It added that "uncertainties stemming from government policies will remain contained, which in turn will ease the downside risks to the business climate and investment flows." But critics still warn that generous spending by the Law and Justice (PiS) government -- including a popular new universal child allowance -- will bloat public finances in the country of 38 million.

Development and Finance Minister Mateusz Morawiecki called Moody's move "rational" after the risks it perceived had "not materialised". The agency also said it would keep its foreign debt grade at A2, reflecting Poland's "economic resilience as... a large, diversified economy that has shown robust real GDP growth irrespective of external headwinds."

"It is also supported by the country's institutional strength and limited vulnerability to domestic and external shocks," it said. Elected in October 2015 on a populist spending platform, the PiS introduced the generous child-benefit subsidy and reverted to a lower retirement age.

Other measures include institutional changes to the constitutional court and public media that critics both at home and abroad have slammed as undermining democratic checks and balances. The EU has threatened sanctions over what it views as rule of law violations. Poland remains one of the EU's most vibrant economies, clocking uninterrupted annual growth since it shed communism in 1989.

Joblessness has fallen to its lowest levels since the advent of the market economy 26 years ago, hitting 7.7 percent in April. The economy expanded 2.7 percent last year, according to revised data, after growth of 3.6 percent in 2015. The government has forecast growth of 3.6 percent this year, while the World Bank has predicted 3.3 percent growth.