Greece returns to investment grade amid ongoing reforms, economic growth
Greece has returned to investment grade status following back-to-back upgrades this month from international credit ratings agencies in Europe and Asia, signaling further upgrades in the months ahead and underscoring the success of the country’s economic policies.
In separate announcements, Japan’s Rating and Investment Information agency and Germany’s Scope Ratings, raised Greece’s credit rating one notch to BBB- from BB+ and assigned a stable outlook for the country. In their respective reports, the two agencies cited a host of reasons for their upgrades. Among them: Greece’s sharply reduced sovereign debt burden, a successful and ongoing reform program, an improved fiscal balance, robust economic growth, healthier bank balance sheets and continued support from European institutions.
“The upgrade is the result of policies that have been implemented over the previous four years and which led, despite international crises, to the reduction in the debt, the acceleration of structural reforms and the utilization of resources provided by the European Union,” the Finance Ministry said in a statement. “The intention of this government is to continue, without deviation or ambivalence, the same serious and responsible fiscal policy, which is the only solid foundation for the growth prospects of the Greek economy.”
The latest ratings actions represent a significant milestone in the country’s economic recovery. In 2011, in the midst of the global financial crisis, Greece was downgraded to junk status by the world’s credit agencies. The following year, the country was forced to undertake a major debt restructuring that was followed by years of painful economic reforms.
These latest upgrades are also seen as a harbinger of similar actions from other rating agencies in the months ahead. Particularly important will be upcoming ratings decisions by the world’s four leading ratings agencies – DBRS Morningstar, Moody’s, Standard & Poor’s, Fitch − each of which hold special status with the European Central Bank. An upgrade from an ECB-recognized agency will mean lower financing costs and greater investments in the country.