Credit rating agency Moody’s has upgraded Greece to investment grade, raising its credit rating to Baa3 with a stable outlook from Ba1 with a positive outlook.

“The upgrade reflects our view that the credit profile of the Greek state is now more resilient to potential future shocks,” Moody’s stated.

The agency noted that public finances have improved more rapidly than expected, attributing this to the government’s policy stance, institutional improvements, and a stable political environment.

“We expect Greece to continue achieving significant primary surpluses, which will steadily reduce its high debt burden,” the agency added.

It further highlighted the ongoing improvement in the country’s banking sector, which lowers the risk of a credit event linked to the financial sector that could negatively impact the state’s credit profile.

Moody’s explained that the stable outlook reflects a balance between the gradual improvement of Greece’s main credit challenges and the positive outlook associated with institutional stability and policy direction.

“The completion of institutional and economic structural reforms that boost growth will take time,” Moody’s said.

“Although the debt-to-GDP ratio has declined rapidly in recent years, it will remain one of the highest among the economies we assess,” the agency added.

However, it expressed confidence that Greek authorities are effectively leveraging resources from the Recovery and Resilience Facility (RRF) to implement policies that support creditworthiness.

The agency emphasised that Greece’s fiscal performance has consistently exceeded its baseline expectations, reinforcing confidence that the country’s debt will remain on a steady downward trajectory.

Moody’s attributed these improvements to ongoing expenditure control and rapidly growing tax revenues, which have benefited from institutional enhancements in tax compliance and collection.

Greek government welcomes the upgrade

Alternate Minister of National Economy and Finance Nikos Papathanasis hailed the upgrade as “another international recognition of the systematic and effective work that has been underway since 2019, reflecting the reformist and growth-oriented nature of the economic policies pursued by the government of Kyriakos Mitsotakis.”

“Despite global economic turbulence, Greece has turned the page,” he continued.

“It has definitively left behind its debt crisis and is now experiencing continuous growth rates significantly higher than the European average,” Papathanasis stated.

With internal political stability secured and macroeconomic indicators stabilised, the government is accelerating efforts to improve the country’s investment-friendly environment, he explained.

“By fully utilising all available financial and investment tools, we are strengthening exports, enhancing economic competitiveness, and incentivising innovation, business expansion, and greater access to bank financing,” he said.

What is more, he said that “the government remains committed to a structured, prudent, and determined economic strategy“.

“Far from populism, experiments, and ‘magical solutions’, our focus is on measurable results that will ensure the sustainable momentum of the economy, social cohesion, and income growth for all,” Papathanasis concluded.