Greece’s sovereign-credit rating was raised two notches by Moody’s in a sign that the country’s economy is heading to better days leaving behind the debt crisis of the past decade.
(Bloomberg) — Greece’s sovereign-credit rating was raised two notches by Moody’s in a sign that the country’s economy is heading to better days leaving behind the debt crisis of the past decade.
The move brings Greece’s rating to Ba1 with stable outlook, only one step away from the investment grade zone that the country lost 13 years ago. Other firms, such as Japan’s Rating and Investment Information Inc., Germany’s Scope Ratings and Canadian DBRS Morningstar, have recently put Greece to the elite status.
“The two-notch upgrade reflects Moody’s view that the Greek economy, public finances, institutions, and the banking system are witnessing profound structural change that will support a continued material improvement in credit metrics and resilience to future potential shocks,” the firm said in its Friday’s statement.
The decision follows the announcement of data for Greece’s growth in the second quarter that shows the expansion of economy by 1.3% from the previous three months, driven by consumption and investments. The country’s statistical authority also revised to the better the first-quarter figures.
After winning a second term in office, Prime Minister Kyriakos Mitsotakis pledged to reduce the debt ratio below 140% of output by 2027 from the highs of 206% in 2020 and achieve primary budget surpluses of 2%-2.5% for the following years.
Earlier this month Greece had its worst floods in history caused by storm Daniel, leaving 15 people and thousands of animals dead, while it destroyed homes, bridges, infrastructures, businesses and factories as it affected some 72,000 hectares (278 square miles). Mitsotakis has asked EU’s support with Europe promising to back Greek economy with €2.25 billion ($2.4 billion).
Investors are worried that this natural disaster may derail the budget, but Mitsotakis has already reassured that fiscal targets won’t change and his administration will meet the targets despite the support that the state will provide to flood-hit people and businesses.
“The stable outlook balances these positive trends against structural challenges, which could weigh on Greece’s credit profile more than Moody’s currently assumes,” Moody’s said, referring to a sizable current-account deficit, the still high government debt burden, and additional economic and fiscal challenges from ageing and climate change.
On Saturday evening, the premier delivers his annual keynote speech at Thessaloniki International Fair in which he’s expected to unveil his economic priorities.
Moody’s decision shows that the government will remain focused in meeting its fiscal targets despite difficulties, Greek Finance Minister Kostis Hatzidakis said Friday.
“Moody’s expects the government to maintain a policy stance that builds a track record of continued economic and fiscal reform implementation over the next four years,” Moody’s said.
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