The rating agency welcomes “the significant improvements in recent years in the implementation of structural reforms and budgetary consolidation.”
Ratings agency Moody’s, the last of the three major agencies to keep Greece in speculative category, signaled Friday that it intends to remove it soon by adding a positive outlook to the rating, but keeping it at Ba1. The outlook is being changed from stable to positive, reflecting “an increased likelihood of a sustained strengthening of the health of the banking sector, which reduces the risks of contingent liabilities for the government,” Moody’s said in a statement.
“Furthermore, with the potential for economic growth and fiscal performance to exceed our expectations, Greece’s fiscal strength could improve more quickly than currently anticipated,” the rating agency said.
Moody’s has however maintained Greece’s rating at Ba1, still in the speculative category but one notch away from being removed from it. The two other major rating agencies, S&P and Fitch, recently removed it from it, for the first time since 2010 and the financial crisis. Indeed, the agency welcomes, on the one hand, “the significant improvements in recent years in terms of the implementation of structural reforms and budgetary consolidation”. But it regrets that they are “offset by persistent difficulties in areas such as improving judicial efficiency, reducing macroeconomic imbalances and the very high burden of public debt”.
Gradual exit from the crisis over the past six years
During the economic crisis (2009-2019) – known as the “debt” crisis due to the explosion of the public deficit and public debt – Greece’s borrowing rates skyrocketed, leading to a series of downgrades of the country’s rating by rating agencies and depriving the country of access to the bond market. On the verge of default, which then threatened to endanger the euro, Athens had benefited from loans from its international creditors (EU-IMF-ECB) totaling €289 billion.
In return, the country was forced to undergo drastic economic reforms demanded by creditors that had a major impact: a 25% reduction in gross domestic product (GDP) in eight years, an explosion in unemployment, a weakening of the public health system, etc. Greece finally emerged from the crisis in August 2018 after returning to growth a year earlier. Despite the high growth of recent years (5.6% in 2022 and 2% in 2023) and the gradual reduction in the public debt rate, many Greeks are suffering from soaring energy and food prices, which the government blames on “global inflation”.
