Fitch Ratings retained Greece’s sovereign credit rating at ‘B’ and its outlook as stable late on Friday but warned of a downgrade should snap elections prove inconclusive or negotiations with the country’s creditors fail to result in an agreement.
Among the key conclusions in the Fitch report are that the country’s funding needs for the next six months are fully covered and that talks with the creditors could be extended into next year.
Fitch had upgraded Greece to ‘B’ from ‘B-’ in May, bringing the country’s rating five notches below investment grade. It now says that the 2014 budget will meet its targets thanks to an unprecedented fiscal adjustment and that fiscal figures are also likely to outperform expectations. Following the stress tests banks need no further capital, Fitch said.
It points out that the economy is bottoming out but warns of the risk that the next government to emerge from possible snap polls in March could be less committed to economic and fiscal reforms. The achievement and sustainability of the midterm target for a primary surplus of 4 percent will depend on continued fiscal discipline and on economic growth, Fitch stresses.