The Greek debt remains sustainable despite the pandemic, thanks to the country’s weapons, but it is unlikely the country’s credit rating will investment grade for another couple of years, Fitch Ratings estimates.
In a special webinar held on Thursday on the economies of Southern Europe, the Fitch economists argued that although the credit sector will see an increase in nonperforming exposures when the payment moratorium ends, the NPE index will continue to show a decline, provided the securitizations continue.
Regarding the growing national debt, which topped 200% of gross domestic product in 2020, the agency’s economists said its amount is not so concerning; they explained that its sustainability depends on its momentum, which is formed by factors such as GDP growth, the primary budget balance and the ratio of interest payments to GDP – i.e. the cost of debt servicing. The country’s weapons, such as the European Central Bank support, the Greek cash buffer and the debt profile, ease Fitch’s concerns.
The rating agency also expects the Greek economy to rebound by 3% this year, followed by 7.6% growth in 2022.