THE rating agency Scope Ratings upgraded Greece’s rating to BBB from BBB- (with the country moving up another step to the investment grade it was already at) and revised the outlook to stable.

It is recalled that on July 12, 2024, the house had maintained the BBB- rating, but had revised the outlook to positive from stable in that assessment. It is noted that the investment grade was initially given by Scope in Greece on August 4, 2023.

According to the report, the upgrade to BBB reflects Scope’s expectation of a continued decline in the general government debt ratio over the coming years. The resilience of the banking system is bolstered by progress in reducing non-performing loans (NPLs) and the privatization of systemic banks. “Greek banks have made significant progress in reducing NPLs. NPLs decreased significantly from 49.2% in June 2017 to 6.4% in June 2024”notes the house. Nevertheless, NPLs remain at this stage above EU averages (1.9% from Q2 2024).

Scope’s estimates call for GDP growth of 2.2% this year and the same level in 2025, and 1.6% on average from 2026 to 2029. The medium-term estimate is, however, comparatively optimistic, as currently no predicts a recession by 2029.

In addition, the adoption of structural reforms and investments, the reduction of macroeconomic imbalances and support from the European institutions strengthen macroeconomic sustainability and the growth trend.

The general government debt ratio has fallen significantly from its peak during the pandemic, reaching 212.6% of GDP in 2020, to 155.3% by the end of 2024, representing a significant reduction of 57 percentage points and moving below the pre-pandemic levels of 185.5% at the end of 2019. The economic recovery from the second quarter of 2020 combined with recently increased inflation and reduced fiscal deficits have led to a significant reduction in public debt and the drivers appear sustainable enough to maintain continued debt reduction, albeit at a gradually milder pace.

The debt ratio is projected to decrease to 145.0% of GDP by the end of 2025 and further decrease to 132.0% by the end of 2029.

Scope updated its medium-term estimates for the primary balance and expects the government to average a primary surplus of 2.75% over 2024-27 for the remainder of Kyriakos Mitsotakis’ government, up from a previous estimate in July of 2024, for surpluses of 2.4-2.5% during the same years.

Statement by the Minister of National Economy and Finance Kostis Hatzidakis on the upgrade from Scope

Today’s upgrade of the credit rating of the Greek economy by Scope is a success for all Greeks and is of particular importance for three reasons, said the Minister of National Economy and Finance Kostis Hatzidakis.

– Firstly, it is the first upgrade of the country within the investment grade, after the financial crisis. The Greek economy is rising higher and approaching the advanced economies.

– Secondly, it takes place in a period of international turmoil and while powerful countries are faced with the downgrading of their creditworthiness.

– Thirdly, it confirms the correctness of the government’s fiscal and economic policy in general, a few days before the discussion of the 2025 budget.

The Scope report highlights the reduction of public debt by 57 percentage points of GDP, from 212.6% in 2020 to 155.3% this year, lower than pre-pandemic levels, while in 2029 it estimates it will be further reduced to 132% , lower than the start of the financial crisis in 2010. The house still notes the outperformance of the state budget, strengthening the resilience of the banking system by limiting bad loans and the growth dynamics of the economy supported by structural reforms and Community funding.

The return of the Greek economy to normality signals better financing conditions for the Public and Private sectors, stimulation of investments, new jobs and better wages. This is the path that the government is following and will continue to follow, away from the sirens of populism. And this success is the success of all Greeks.