Global agency Fitch Ratings believes Greece will continue on a path of adopting sound fiscal policies, which, in conjunction with ambitious reforms aimed at raising revenues (including primarily clamping down on tax evasion), will lead to an impressive performance in 2024.
In its European Peer Review 2024, the agency noted that Greece is rated BBB- (Stable), reflecting the country’s per capita income levels and governance indicators, which are significantly above the “BBB” average, as well as the credibility of its policies, supported by its membership in the EU and the eurozone.
Fitch says these indicators help guard the country against the past public debt crisis leftovers, such as large public and external debt, high (though decreasing) unemployment, low medium-term growth potential, and some persistent vulnerabilities in the banking sector.
Prudent policies and growth dynamism have contributed to fiscal results exceeding expectations in recent years, Fitch notes. Despite existing expenditure risks, Fitch Ratings expects primary surpluses above 2.5% of GDP over the next three years.
Under Fitch’s baseline scenario, it projects that the public debt-to-GDP ratio will decrease by more than 50 percentage points by 2026, from its peak of 206% in 2020, marking one of the steepest declines among the states under review.
Although still three times the “BB” average, the risks related to public debt financing are limited due to the large share of debt on favorable terms, stable financing conditions, and a significant cash reserve (around 14% of GDP).
