Fitch Ratings and the European Commission have given their vote of confidence in the policies the Greek government is pursuing, as the particularly positive climate at the annual conference Fitch organized in Athens on Tuesday regarding the country’s credit outlook and the progress recorded since last summer’s election showed.
The representative of the Commission’s Directorate General for Economic and Financial Affairs in Athens, Chris Allen, who was the keynote speaker of the conference, thanked Fitch for Greece’s credit rating upgrade last Friday, saying that Greece “deserved it.”
He went on to praise government policy, noting that Athens is truly committed to the application of reforms, and – importantly – the rating agencies realize that. “After some 10 years of crisis, Greece has one last chance to move in the right direction and the government wants to achieve that,” he said.
Allen also noted that after several years, growth is returning and although the 2 percent rate is not sufficient, there are signs this could be strengthened as the labor market is improving, unemployment – despite being very high – is going down, the yields on Greek bonds have dropped considerably, and business and consumer confidence are at very high levels.
“Greece has an important window of opportunity, though small, for sustainable growth,” said Allen. He did however add that the government faces several challenges, such as the major shortfall in investment, the high level of bad loans, high long-term unemployment, getting its credit rating back to investment grade, and improving the business environment.
Michele Napolitano, head of the Western European sovereign team at Fitch, told the conference that the main factor leading to Greece’s upgrade to BB is the much more stable political environment, as well as the positive results of the new government’s policies; he stressed in particular the fact that the 2020 budget contains serious steps toward changing the fiscal policy mix, which the rating agency considers necessary.
Pau Labro, director of Financial Institutions at Fitch, said the Greek credit sector is slowly but steadily heading back to normality, and despite the challenges it is the only one in Europe for which the agency has assigned a positive outlook.