ATHENS, Greece — On Saturday, Greece’s center-right administration celebrated a significant credit rating boost by Moody’s. This marks the last of the major ratings agencies lifting Greece out of the junk bond status, a situation it had been stuck in for 15 years amid a severe debt crisis.
Finance Minister Kostis Hatzidakis remarked that the upgrade symbolizes closing a major chapter for the Greek economy, signifying the nation’s return to stability within Europe. He underscored the upgrade as an achievement for not only the government but the entire Greek populace.
Late on Friday, Moody’s elevated Greece’s credit rating from Ba1 to Baa3. The agency attributed this decision to Greece’s public finances improving at a much faster pace than anticipated. Moody’s pointed to governmental policies, institutional advancements, and political stability as influential factors. They expect Greece will maintain significant primary surpluses, gradually reducing its considerable debt burden.
While Greece began seeing improvements in its credit ratings in late 2023, the recent news arrived as a relief to a government currently grappling with strikes and protests over its handling of a tragic train incident two years prior.
Hatzidakis made his comments shortly before handing over his ministerial duties to colleague Kyriakos Pierrakakis during a swearing-in ceremony, just after the announcement of a government reshuffle.
In response, Prime Minister Kyriakos Mitsotakis acknowledged the announcement, highlighting the upgrade as an affirmation of the nation’s substantial advancements. In an online post, he stated, “We remain fully committed to reforms that attract investment, create jobs, and drive sustainable growth.”
Greece had descended into financial turmoil in 2010, necessitating three international bailouts to stave off bankruptcy and mend public finances. These were accompanied by harsh austerity measures directed by the European Union and the International Monetary Fund.
Greece’s national debt rose above 200% of its GDP in 2020, but has been consistently declining since then. Greek central bank forecasts suggest it will drop below 150% this year.
Moody’s commended Greece’s persistent efforts in debt reduction, noting, “Over a number of years, the Greek public finances have outperformed our baseline expectations, which increases our confidence that Greek debt will remain on a firm downward path.”
These improvements are largely due to continuous expenditure restraints and rapidly increasing tax revenues. This is facilitated by sustained institutional improvements in tax compliance and collection efficiency.
