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Satisfaction to the government for the rating upgrade by Fitch


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DBRS and Standard and Poor’s have already ranked Greece just one level below investment grade, while Moody’s rates the country at the lowest level of all rating agencies, three below investment grade.

The government is satisfied with the upgrade of the debt to BB+ from BB, with a stable outlook, by the rating agency Fitch, which places the country just one “step” before investment grade, as there is a perception that Greek efforts for fiscal consolidation are paying off fruits, and are recognized internationally.

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This is the 12th upgrade of the Greek economy in the last 3.5 years, despite successive external crises, commented Finance Minister Christos Staikouras.

It is noted that DBRS and Standard and Poor’s have already ranked Greece just one level below investment grade, while Moody’s rates the country at the lowest level of all rating agencies, three below investment grade.

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Prime Minister Kyriakos Mitsotakis described the upgrade of Greece’s credit rating by Fitch as “very welcome news”.

In his post on Twitter, Kyriakos Mitsotakis emphasizes that “the upgrade of Greece to the BB+ category brings us one step ahead of the investment grade”.

At the same time, the prime minister noted that “we remain committed to our reform agenda in order to attract investment, create jobs and accelerate growth”.

The optimistic predictions

In particular, it projects a further reduction in the general government deficit to 1.8% of GDP in 2024 from 3.8% estimated for 2022, partly due to the optimization of temporary support measures. This implies an improvement in the primary balance of 2.5 percentage points to a surplus of 0.9% in 2024 and a balanced position in 2023. There is, Fitch notes, some uncertainty about fiscal policies after the election, but risks are mitigated by the broad commitment for fiscal prudence and recent performance in this area.

For public debt, which is estimated to have declined by a record 24.5 percentage points to 170% of GDP in 2022, the house expects it to continue to decline at a more limited pace over the medium term, mainly due to high primary surpluses, to drop to 160.6% in 2024.

For the banking sector, it notes that significant progress continues to be made in reducing non-performing loans (NPLs), with the domestic NPL ratio at 9.7% in Q3 2022, falling below 10% for the first time since 2009, peaking with the securitizations under the “Hercules” plan and the broad-based recovery.

Fitch expects further improvement in bank assets, which will be supported by limited new inflows (NPLs) as banks complete their outstanding non-organic actions.

Fitch forecasts a growth rate of 0.9% for the Greek economy this year and 2.3% for 2024, revising its estimates for the better from the last assessment in October, as the balance of risks has improved, particularly due to the recent reduction in energy prices and limited prospects for rationing energy distribution in Europe.

“Additional fiscal space in February”

Finance Minister Christos Staikouras made the assessment that “additional (fiscal) space will be created in February” for additional support measures for vulnerable households on Saturday morning.

Speaking to Action24, Mr. Staikouras described what has been done by the government so far, pointing out that 2.5 billion euros have already been given.

“Pensions have increased significantly, the solidarity levy has been abolished, so civil servants have seen their salary increase for the first time,” he said, among other things, and added: “Where are we now? We are implementing the measures we had announced and are trying to find fiscal space for additional interventions.”

According to the finance minister, finally in 2022 it seems that tax revenues have gone even better than the budget estimates, and it seems that the price of natural gas will move – although there are high uncertainties – at lower levels than the budget predicted .

“Given this, we believe that a fiscal space is beginning to be created, but it should be safe. When we know, recommendations will be made to the prime minister, who will set the priorities. He wants prudence and responsibility”, concluded Christos Staikouras.

It also notes that “the authorities continue to make progress on their reform agenda, which is linked in part to milestones in the Recovery and Resilience Fund, which, combined with the final absorption year of the NSRF 2014-2020 resources, will provide a strong investment boost ».

For inflation, Fitch expects a steady slowdown from 9.3% last year to 5% this year and 1.5% in 2024, in line with lower energy and other raw material prices as well as base effects. Core inflation is also expected to decline, albeit at a more limited pace.

On wages, it notes that in the third quarter of 2022 they increased by 7.3% year-on-year for the entire economy, the highest rate since 2010, while job vacancies from the first quarter to the third quarter of 2022 were the most in a decade.

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