Standard & Poor’s (S&P) raised Greece’s credit rating to BB+ with stable outlook from BB with a positive outlook late on Friday (Athens time). The long-term sovereign credit rating is one rating away from investment grade, the government’s target.
S&P is the second of four large credit agencies followed by the European Central Bank, which has rated Greece below investment grade. A similar rating was released by DBRS on March 18.
According to S&P, the war in Ukraine is the key factor in its outlook of a slowing down of the Greek economy from 8.3% in 2021 to 3.4% in 2022, while it noted that inflation may possibly slow down as of September. Despite the more intense international factors, the agency said, the government is expected to progress further on implementing structural reforms and fiscal adjustment as laid out by the framework of its National Development and Resilience Plan, consolidating the public debt’s downward trend as a percentage of GDP.
“S&P’s upgrade, following two years of a pandemic and in the midst of war, confirms the confidence in the Greek economy,” Prime Minister Kyriakos Mitsotakis said in a tweet following the release of the rating.
He added that “Greece is a hairbreadth’s away from the coveted investment grade, a stamp of credibility that will upgrade Greece’s investment and development prospects. We continue to work consistently for the home stretch with the same seriousness, focus, and hard work!”
The upgrade “is the 9th sequential upgrade of the Greek economy in the last 2.5 years, despite the successive and repeated crises,” Finance Minister Christos Staikouras stressed.
He called the rating a result and crowning achievement of prudent fiscal policy, visionary strategy, high cash and cash equivalents, implementation of structural reforms, a rise in investments and exports, a drop in nonperforming loans in bank portfolios, a drop in unemployment, and an improvement in the economy’s competitive ability.
However, he noted, the government “is not overlooking the great challenges, threats, and new factors formed by international developments as of late,” and remains focused on a strong and sustainable growth, creating new and well-paying jobs, and boosting social cohesion further.