One of the biggest debt reduction internationally commends rating agency Moody’s it will be noted Hellas in the coming years, supported by an acceleration in nominal GDP growth, while emphasizing that the sustainability of Greek debt is already at a much better level than that of Italy, which has an investment grade rating, and will remain so. This may just be another strong signal for a Greek rating upgrade in the near term as, according to all houses, the key criterion for a rating upgrade and of course an investment grade recovery is the belief that the debt index is on a sustained downward trajectory.

Elections

In particular, in a new analysis, Moody’s confirmed that, following the results of the first round of elections, the possibility of another New Republic government, which means the continuity of fiscal and economic policies and, therefore, is a positive development for creditworthiness. Continued focus on improving the business environment and revitalizing the banking sector, coupled with the implementation of milestones and reforms under the Recovery Fund, will boost economic growth, the House of Representatives adds. The above, combined with a commitment to fiscal consolidation and larger primary surpluses, as well as maintaining current fiscal and economic policies, improve the prospects for a significant reduction in Greece’s public debt, the House of Representatives stresses. A contraction to be supported by growth, Moody’s notes as the Greek economy has rebounded strongly from the pandemic, with real GDP rising to 5.9% in 2022 and 8.4% in 2021 after contracting 9% in 2020.

Encouraged by the prospect of steady growth in nominal GDP over the coming years, Moody’s predicts that Greece will experience one of the largest public debt reductions in the world, with the debt ratio falling below 150% of GDP by 2025 by the end of 2022.

As the international chamber explains, although the index will remain very high for the next decades, Greek debt has become significantly more resilient thanks to the very favorable terms of repayment of eurozone loans and the significant debt relief granted to Greece in 2017.

These factors have led to very low debt service costs (interest payments as a percentage of government revenue), which is also a preferred indicator for measuring the “weight” of debt, which Moody’s estimates will remain low for an extended period of time, even taking into account the financial impact of the pandemic and the return of Greece to regular markets.

In fact, as he points out, with interest payments in the form of a share of government revenues of 5.5-6.1%, Greece’s debt sustainability will remain higher than that of Italy, and significantly lower than other countries with the same rating (Ba3 ), until 2026 expands the horizon of its forecasts.

The significant de-escalation already marked by Greek debt has also been noted by UBS as despite higher interest rates, the debt-to-GDP ratio continues to decline, falling even below pre-crisis levels thanks to a strong recovery in nominal GDP. fueled by high inflation.

Greece is experiencing the second-biggest recession in the eurozone after Portugal, according to the Swiss bank, with debt reduced to 171% of GDP in the fourth quarter of 2022, down 4.5% from the third quarter of 2022, down 9.3% compared to since the end of 2019, but also by 38% compared to the pandemic highs that were observed in the first quarter of 2021. According to UBS, Greece’s debt will fall to 158.5% of GDP this year, and to 151% of GDP in 2024.