Despite expectations that Moody’s would declare Greece’s debt outlook positive, the credit rating agency has kept it stable. As expected, Moody’s kept Greece’s debt rating at B1, four notches below investment grade.
The rating agency explained its decision on the outlook by noting the reduced danger of the government backing off its policy for reducing the country’s high debt with prospects of rather moderate growth and the need for deep changes in the civil service.
Moody’s said in its report that, despite making significant progress in the past few years, Greece’s debt is likely to remain in the B category for the next several years. Of course, the highest reaches of this category include investment grade ratings BBB+, BBB and BBB-.
For growth to accelerate, investments must speed up significantly and bad loans must be cut, it said. While Greece has managed to implement many reforms over the past few years, those that require institutional and cultural changes, as in, for example, civil service restructuring and a culture of paying one’s bills, will take years to show results, Moody’s added.