Moody’s upgrades Greece credit rating, outlook stable

After years of battling to recover from a debt crisis, ratings agency Moody’s raised Greece’s credit rating on Friday, lifting the nation out of junk territory.

Moody’s shifted its outlook for Greece from positive to stable, along with the ratings increase from Ba1 to Baa3.

For the first time since 2010 and the country’s financial crisis, Greece was moved out of junk territory last year by the other two major rating agencies, S&P and Fitch.

“The upgrade reflects our view that Greece’s sovereign credit profile now has greater resilience to potential future shocks. The public finances have improved more quickly than we had expected,” Moody’s Ratings said in a statement.

“Based on the government’s policy stance, institutional improvements that are bearing fruit, and a stable political environment, we expect Greece to continue to run substantial primary surpluses which will steadily decrease its high debt burden.”

Moody’s also noted that the health of the European nation’s banking sector “continues to improve.”

The agency’s view was stable rather than optimistic, stating that “economic structural reforms will take time” and that “Greece’s main credit challenges will be slow to improve.”

Greece’s central bank predicts GDP growth of 2.5 percent this year, following stronger economic development in prior years (5.6 percent in 2022, 2.0 percent in 2023, and 2.3 percent in 2024).

But Greeks are still contending with high food prices and low salaries.

Interest rates skyrocketed during the 2008–2018 economic crisis, which saw the national debt and deficit skyrocket. As a result, ratings organizations gradually downgraded Greece’s credit rating.

The European Union, World Bank, and International Monetary Fund provided the Greek government with 289 billion euros in bailout funds to prevent Athens from going bankrupt and leaving the eurozone.

The so-called “troika” wanted universal reforms in return.

These included significant reductions in governmental spending and salaries, tax increases, privatizations, and other broad initiatives to stabilize the economy.

The economy shrank by more than 25%, unemployment rose to about 28%, and a large number of highly qualified workers left the country.

After seeing economic growth for the first time the previous year, Greece emerged from the crisis in August 2018.