Poland's finances are stable and it has prefinanced around a third of its 2023 borrowing needs, Prime Minister Mateusz Morawiecki said on Monday, as the country faces soaring bond yields amid a cost of living crisis that is stretching the public purse.

The yield on benchmark 10-year bonds exceeded 9% for the first time in two decades on Friday, creating a headache for a government that is spending big to help voters deal with inflation ahead of elections scheduled for 2023.

"Our public finance system is stable and strong, the banking system is well capitalised," Morawiecki told a news conference. "We are shaping our (bond) issuance policy in such a way as to secure funds ... we have already prefinanced 30%-35% of next year."

In a note published on Monday, analysts from Alior Bank said that both rising yields in core markets and domestic factors - such as fears Poland will not receive European Union funding due to a row over the rule of law - were contributing to the increase in borrowing costs.

On Friday, state-run development bank BGK cancelled a bond auction in a move Morawiecki said was "normal" given the turbulence in financial markets.

BGK has been issuing bonds that are used to finance the government's response to the COVID-19 pandemic and defence spending.

"We are going to organise auctions when there are the best and most appropriate conditions for it," Morawiecki said.

The yield on 10-year Polish bonds was 8.465% at 0924 GMT on Monday, almost 30 basis points lower on the day.

Poland said in August it had financed all of its 2022 borrowing needs.

Poland's gross borrowing needs are estimated at 260.7 billion zlotys ($53.4 billion) in 2023, according to the budget.

($1 = 4.8796 zlotys) (Reporting by Alan Charlish and Pawel Florkiewicz; Editing by Alison Williams and David Holmes)