Moody's rating agency gave Greece's market profile an unexpected boost on Friday by raising the country's credit rating amid the pandemic, citing the prospect of a robust recovery next year.
The Greek rating climbed from B1 to Ba3 with a stable outlook, Moody’s announced in its scheduled assessment of the Greek economy.
Although it has likely not factored in the new lockdown that begins in Greece on Saturday, Moody’s projected that the economy will shrink 9% this year before staging a strong rebound and keep growing in the medium term by 3.5% per year.
The agency praised the country’s ongoing reforms in various key areas and stressed its favorable debt structure.
”Ongoing reforms support a sustainable improvement in institutional strength and have already brought tangible progress in areas including tax administration and compliance and the fight against corruption. In Moody's view the risk of reversal of these important improvements is low. Moody's considers this action to be motivated in part by governance-related factors under its ESG framework,” the agency said in its report.
“The country's growth prospects over the coming years are positive notwithstanding the negative near term impact of the pandemic particularly on the tourism sector. Greece's economy will benefit from ongoing efforts to improve the investment climate coupled with inflows of very substantial European recovery funds. Favorable growth prospects, combined with a return to a prudent fiscal stance, will lead to a gradual reversal in the public debt trend. In addition, Greece benefits from a very favorable debt structure and strong affordability,” it noted.
“This is a particularly positive development for our country,” stated Finance Minister Christos Staikouras late on Friday. “This rating took place in conditions of unprecedented recession in the global economy and in the national economies, as well as of high uncertainty caused by the pandemic,” he added.
“It constitutes evidence of increased confidence in the country and the government for the management of the current crisis, its reforms, and the overall prospects of the Greek economy,” added Staikouras.