ATHENS Greece’s credit rating has been upgraded to investment grade by Standard & Poors in the first such move by one of the three main rating agencies since the country’s sovereign debt crisis rocked the country more than a decade ago.
Late Friday, S&P Global upgraded Greece’s rating to BBB- from BB+, citing the country’s improved fiscal situation, which the government hopes will boost market confidence, attract foreign investment and lower borrowing costs. S&P said the ratings outlook was stable.
Proud of the recognition of our country’s achievements, Greek Prime Minister Kyriakos Mitsotakis wrote on social media. We are determined to continue our reform agenda – a path that attracts investment, creates jobs and delivers inclusive economic growth.
Securing an investment-grade rating was a key goal for the Conservative leader, who secured a second term in office with a landslide victory in June.
The return to investment grade in the S&P comes more than a decade after Greece found itself on the verge of bankruptcy and exit from the euro zone. After three bailouts that funneled some $290 billion in loans to Athens, as well as onerous austerity measures imposed by creditors, the country emerged from the bailout era in 2018 but had the dubious distinction of being the only eurozone member whose sovereign debt was rated garbage .
Finance Minister Kostis Hatzidakis welcomed the S&P hike and pledged to maintain prudent fiscal policy. In a statement, he said the country faces a historic window of opportunity by combining the right economic policies with political stability.
The main opposition party, Syriza, criticized Mitsotakis’ post-modernization administration.
The investment grade is based on clay feet of a health service falling into ruin, poorly functioning education, dismantling of public infrastructure, violated workers’ rights and falling real incomes, wrote Syriza leader Stefanos Kasselakis, adding that the standard of living should reach investment level.
The European Stability Mechanism called the modernization a “major achievement and game-changer” for Greece. “Greece now needs to gain experience and maintain investors’ confidence that it is a strong and stable investment-grade country,” the ESM, the euro zone rescue fund, said in a statement. “Greece must maintain the momentum of reforms and maintain a prudent budgetary situation and continue its path of modernization.
S&P said further reductions in the country’s debt as a percentage of annual economic output could trigger another increase, but added it was cautious about political pressures hampering Greece’s ability to maintain large primary budget surpluses. Greece expects economic output to grow by 3 percent in 2024, after forecast growth for this year of 2.3 percent, more than twice the euro zone average.
The other two major rating agencies, Fitch and Moody’s, rate Greece one notch below investment grade. Last month, DBRS Morningstar upgraded Greece’s credit rating to BBB investment grade. Fitch is expected to re-rate Greece on December 1.
Meanwhile, France and Italy avoided a cut. A downgrade could spell problems for both indebted countries if markets begin to doubt their economic soundness.
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