Rating agency DBRS Morningstar upgraded Greece’s debt to BB rating with a positive trend of BB rating (low) with a stable trend, speaking of a strong economic recovery this year and significant progress in reducing the share of red loans of 21.3% in June 2021 against 40.6% in December 2019.
The positive trend reflects the opinion of the house that the future outlook for the Greek economy appears to be considerably strengthened.
The debt raising “reflects DBRS’s positive view of fiscal and economic developments prior to the pandemic which has enabled the country to tackle lingering challenges with greater resilience,” the firm said in a statement, noting that Greece’s strong fiscal performance ahead of the outbreak of the coronavirus health crisis and high cash reserves, which reached € 32.2 billion at the end of June 2021, gave the government fiscal leeway to mitigate the impact of the pandemic by implementing support measures.
Despite the heavy dependence on tourism, the 8.2% decline in real GDP in 2020 was more moderate than initially estimated and laid the groundwork for a strong recovery so far this year, a the house said, noting that key factors in the upgrade needed improvements in the areas of “fiscal management and policy”, “economic structure and performance” and “monetary policy and financial stability”.
DBRS refers to the economy growing 6.9% in the first half of this year compared to the corresponding period of 2020 and data that shows a strong tourism performance in the third quarter, with international flights in August reaching 93% of 2019 levels.
Most important, he stresses, is that Greece is expected to receive significant amounts from the EU’s Next Generation EU Recovery Fund and the Multiannual Financial Framework, amounting to around € 70 billion. He also notes that the national recovery and resilience plan includes reforms that could stimulate equitable growth and investment, thereby narrowing the investment gap of Greece compared to other countries in the euro area.
Following the 2019 elections, the Greek government has made significant progress in unlocking large investment projects, reducing bureaucracy and improving the business environment, although there is still work to be done. to do, according to DBRS.
“While uncertainty remains over the future of the global health crisis, DBRS believes Greece will remain committed to fiscal adjustment when the impact of the pandemic subsides and fully comply with directives from European institutions when the lenses will come back. ” said the house.
Regarding the public debt, he specifies that it remains at a very high level, “although there are many risk reduction factors”, Greece benefiting from its favorable structure, the public sector holding around 80% of the debt. and essentially very low interest rates.
Chr. Staikouras: Greece’s credibility and prestige have been strengthened
Acquiring an investment grade in 2023 is one of the goals of finance staff, which has become realistic, said Finance Minister Christos Staikouras after the country’s credit rating was upgraded by rating agency DBRS Morningstar. He stressed that “this is without doubt a series of important positive developments for the Greek economy, which are the fruit – and at the same time the certification and the reward – of the good policies which have been designed and implemented in the economic field “.
In detail, the Minister said the following:
The “rating house” DBRS Morningstar today upgraded Greece’s credit rating one notch from BBLow to BB. The upgrade comes just a week after Scope Ratings upgraded Greece. This is the fourth time that an international rating agency has revalued our country’s debt in the midst of a health crisis and the seventh since New Democracy took power. This is, without a doubt, a series of important positive developments for the Greek economy. Developments which are the fruit – and at the same time the certification and the reward – of the good policies which have been designed and implemented in the field of the economy and in general of the effectiveness of government policy.
At the same time, these developments prove that Greece’s credibility and prestige have been enhanced. As the rating agency characteristically points out in its report, the Greek economy is showing strong signs of recovery and its outlook has improved significantly. This is due – as the Chamber points out – to the accompanying measures taken by the government to contain the recession in 2020, to the implementation of important structural reforms, “despite the health crisis”, as well as to the impetus given by the use of European resources. that our country should receive in the years to come. Use based on the “Greece 2.0” National Recovery and Sustainability Plan, which according to the report “consists of reforms that should enhance inclusive growth and investment”. In addition, the house makes particular mention of the significant reduction in non-performing loans and the extension of the “Hercules” program, which – as he points out – can help to reach a single-digit percentage of red loans in 2022, as well. that as a safe amount of money.
The financial staff continue the systematic and hard work, with vision, plan, determination, moderation and confidence in the potential of our country and its citizens. It sets precise priorities and implements targeted policies in order to achieve precise objectives, which have become realistic. “One of them obtains an investment grade in 2023. Our effort for a stronger, more productive and more competitive economy and a fairer and more cohesive society is underway.”
– Christos Staikouras (@cstaikouras) September 17, 2021