Their assessments of his progress development and from fiscalscenarios and consequences electionsthe possibility of restoring investment grade and new Stability program governments are analyzed in a flurry of reports, 10 days before the polls, Morgan Stanley, Goldman Sachs and the Fitch ratings agency. The general consensus is that elections are a factor of uncertainty that may slightly delay the investment phase, but will not interrupt it. In addition, Greece will see stronger growth than the rest. Eurozonewill continue to improve its financial position, even if Fitch considers some of the Stability Program estimates to be rather optimistic.

In terms of the political landscape, both Morgan Stanley and Goldman Sachs believe there will most likely be a two-round election under election law. Goldman even claims that N.D. he may be motivated to run a runoff to get enough seats to build his confidence or at least gain more power in a possible governing coalition. According to the same, however, government cooperation with PASOK this is unlikely as the leaders of the two parties have emphasized their differences. According to him, only if PASOK receives strong electoral support, a government of cooperation between the two parties is possible. For its part, Morgan Stanley notes that, according to the latest polls, the most likely scenarios “show” the New Democracy government either alone or in cooperation with PASOK after the second election, while cooperation between SYRIZA and PASOK seems possible but less likely.

“In any case, with Recovery Fund to keep many key reforms under control until 2026, it is unlikely that there will be any significant policy changes after the elections,” he emphasizes.

Update

According to Morgan Stanley, the election is actually moving investment levels (quite) to a later date. While Greece is well on track to do so, rating agencies will wait until political uncertainty subsides before reviewing the country’s credit rating, he notes, which will take time. Thus, he maintains his view that Greece will be able to achieve this in the first half of 2024, however he sees the possibility that this “milestone” will be restored earlier, in the second half of 2023, if there are positive surprises from the development front. Goldman Sachs notes that the results of the general election will be essential to accelerate the implementation of the Recovery Fund and ensure long-term growth through capital accumulation.

“The convincing implementation of the Recovery Fund to promote and facilitate the structural transformation of the economy is likely to be the last step for Greek government bonds to restore the investment grade rating,” as it usually says.

Stability program

The houses are also dedicated to the Stability Program recently introduced by the Greek government. commission. Goldman emphasizes that the program is an ambitious plan to further reduce the debt-to-GDP ratio by almost 10% annually over the next three years. In the stress test conducted, even under the worst-case scenario, with a 1% growth shock and a 100 bps widening of the Greek spread, deviations from this fiscal trajectory predicted by the program are small, as it emphasizes. , with index debt growing by just 5% by 2030.

The program is optimistic in some projections, not taking into account pre-election advantages, Fitch notes. However, it confirms the view that the debt ratio will continue to decline over the medium term and highlights the broad commitment to financial prudence. Specifically, it says that fiscal projections could turn out to be optimistic, and this is partly because the 2.3% growth estimate for this year is largely due to an expected increase in investment, which contributes 1.8% to GDP. Fitch also notes that a prolonged political cycle could result in delayed payments from the Recovery Fund, negatively impacting growth.

The fiscal projections also do not take into account fiscal measures announced before the elections of 0.1% of GDP in 2024 and 0.3% in 2025 and 2026, Fitch adds. At the same time, he emphasizes that he expects a slower decline in the debt ratio over the medium term and is unlikely to fall to 135.2% in 2026, as envisaged in the program.