Credit ratings agency Moody's revised its outlook on Greece to "positive" from "stable" on Friday, citing a healthier banking sector and a better-than-expected economic performance.
The agency also affirmed its rating for Greece at 'Ba1'. It is the only ratings agency that continues to classify Greece as non-investment grade, placing it one notch below the investment grade threshold.
Greece has seen a series of rating upgrades recently, with S&P Global Ratings upgrading in April and Fitch in December, after 13 years in the junk category.
Since 2020, the nation's debt, the highest in the euro zone, has shrunk by 40 percentage points, reaching 160% of its gross domestic product in 2023 and is projected to drop further to 152% of GDP by the end of this year.
MINISTER STATEMENT
"With the possibility of economic growth and fiscal performance exceeding our expectations, Greece's fiscal strength could improve faster than currently expected," Moody's said in its report.
The positive assessments by Moody's are a response to the nihilistic criticism, said the Minister of National Economy and Finance, Kostis Hatzidakis, following the announcement of the company's upgrade of the prospects of the Greek economy.
Specifically, the minister made the following statement:
"Moody's today upgraded the outlook for the Greek economy for three main reasons, which, as it notes, are the following: faster growth, better-than-planned fiscal performance, which is mainly attributed to measures to curb tax evasion, and the further strengthening of the banking system.
This is the second upgrade of the economy's outlook by an international rating agency, following a similar move by DBRS last week.
Moody's notes that the Greek government has demonstrated a strong commitment to fiscal prudence and has implemented a series of fiscal reforms in recent years (digitisation of the Greek Tax Administration, e-invoicing, interconnection of POS with cash registers) that have boosted revenues. It also points out that higher primary surpluses—possibly combined with stronger real and nominal GDP growth—will in turn support faster debt reduction.
While in relation to banks, the house highlights that the health of the Greek banking system has already improved significantly in recent years and Greek banks are now closer to the EU average in terms of capitalisation, profitability, and NPL ratios.
The Moody's rating is yet another response to those who insist on a nihilistic criticism of the government's economic policy. A policy that the government will continue to pursue at a faster pace, not only because it is recognised abroad but above all because citizens see its positive effects on growth, incomes, lower unemployment, and a fair distribution of the tax burden on a daily basis."
