Moody’s: Greece on path to credit upgrade, if it continues reforms

The International Rating Agency lauds fast moves by the new government

The conditions under which Greece’s credit rating could be upgraded were highlighted in a report released by Moody’s Credit Ratings Agency.

In the report, Moody’s points out that the continued implementation of agreed-upon measures with Greece’s European partners, including reforms strengthening institutions, were improving the business environment and boosting investment, will maintain solid public finances, something that may lead to a credit rating upgrade.

The international rating agency – which forecasts a GDP growth of 2.1% in 2019 and 2.5% in 2020 – also notes that if the Greek government does what is necessary, then public debt as a percentage of GDP will decrease much more drastically than current estimates.

Moody’s welcomes the fact that the Mitsotakis government is focusing on attracting investment as well as the initiatives it has taken so far, stressing that the lack of investment has hitherto been a key obstacle to achieving higher growth rates.

“The government has moved quickly, announcing the abolition of the property tax (ENFIA) at the end of July as well as a plan to reduce corporate tax rates to 24% next year and to 20% in 2021. It also announced the complete abolition of capital controls from 1 September, and its intention to repay 1/3 of IMF loans. At the same time, the government has taken steps to finalise the privatisation of the former Athens airport, in a major development project with a significant economic impact,” the report said.

However, Moody’s points out that despite the notable positive developments so far, the country’s credit rating is expected to remain at ‘B’ for the coming years, unless significant improvements are made in strengthening the institutions and its financial performance.