Fitch on Friday upgraded Greece’s long-term foreign currency rating by two notches to BB- from B with a stable outlook, citing improving public finances and relations with European creditors.
Analysts noted that with the final review of the Greece’s European Stability Mechanism (ESM) programme completed, the path has been cleared for a successful exit from the ESM programme later this month.
“The accompanying debt measures improve general government debt sustainability,” Fitch said, adding: “Fitch believes that debt sustainability is also underpinned by a record of general government primary surpluses, our expectation of sustained GDP growth; additional fiscal measures legislated to take effect through 2020 and somewhat reduced political risks.”
The rating agency pointed to improvements in the nation’s public finances, noting they had projected a primary surplus of 1.9 per cent of GDP last year, which Greece topped with a surplus of 4 per cent of GDP.
Fitch added: “The domestic political backdrop has become somewhat more stable and the working relationship between Greece and European creditors has substantially improved, lowering the risk of a future government sharply reversing policy measures adopted under the ESM programme.”
Friday’s upgrade leaves Greece three notches away from attaining investment grade status.