Late Friday, the ratings firm Moody’s gave Greece’s economy a significant vote of confidence by raising the country’s credit rating by two notches.
Moody’s said it was upgrading Greece’s rating from Ba3 to Ba1, with a stable outlook. It stopped just short of returning the formerly struggling country to formal financial respectability.
Moody’s said the government’s parliamentary majority following June elections “provides a high degree of political and policy certainty for the coming four years, fostering the ongoing implementation of past reforms and the design of further structural reforms.”
It said it expects Greece’s GDP to grow an average 2.2% annually in 2023-27 driven by investment and consumption, a “very significant improvement” compared to average growth of 0.8% in the five years before the pandemic.
It said Greece’s debt will likely fall to close to 150% of GDP as early as 2024 due to stronger GDP growth than projected earlier.
Moody’s said it sees the Greek government’s commitment to reform implementation and fiscally prudent policies as “credible and strong,” adding that there is also “broad consensus in society for these policies.”
But Moody’s warned that Greece’s economy is susceptible to external shocks, given the size and importance of key sectors like tourism and shipping.
Greece hails Moody’s upgrade
Finance Minister Kostis Hatzidakis said the upgrade was “mainly a proof that the government must remain faithful to a sober fiscal policy,” to be combined with “sensitivity” on social issues.
“The credit upgrade of Greece by two notches by Moody’s is not just another reward for the fiscal and overall economic policy of the government. It is mainly a proof that the government must remain faithful to a policy of fiscal seriousness.
“A policy which, despite the difficulties, will continue to be committed to the goals that have been set and to the achievement of the corresponding primary surpluses.
“We have achieved a lot in the economy in the last four years. We are judged every day and there is no reason to let the progress that has been made go to waste. Steadily, we will continue to combine social sensitivity with financial responsibility,” Hatzidakis said.
Last week rating agency DBRS Morningstar lifted Greece’s credit rating to investment-grade status to triple B.
DBRS said the upgrade reflected its view that, in line with Greece’s “impressive” record, “the Greek authorities will remain committed to fiscal responsibility, ensuring that the public debt ratio stays on a downward trend.”
DBRS added that it expected Greece’s primary fiscal balance to reach a surplus of 1.1 percent this year and 2.1 percent in 2024.
The news comes as the Greek economy recorded a growth rate of 2.7 percent in the second quarter of 2023 compared to the same period in 2022, according to data compiled by the Hellenic Statistical Authority (ELSTAT) earlier in September.
In August, Scope Ratings, the leading European provider of credit ratings, raised Greece’s rating to investment grade.