Greece's credit ratings upgraded
Two credit rating agencies, Scope Ratings and Moody's Ratings, upgraded Greece's credit ratings over the weekend. This is a major coup for the country because it makes it cheaper for the government to borrow money, and Greek companies also stand to benefit. But have things really improved for Greece, which just a few years ago was facing a sovereign debt crisis.
Long-term resilience
Things are looking up, Proto Thema observes:
“The upgrade to BBB+ does not mean that Greece is now risk-free. It does, however, mean that the agencies recognise improved resilience in the country's fiscal performance, with a better ability to weather international turbulence without reverting to the conditions of the previous crisis. The international environment makes this development all the more significant. When countries are seeking funds to finance support measures and cushion the impact of crises, a better credit rating is a valuable asset. It can bolster market confidence and provide greater security at a time when borrowing costs remain a critical factor.”
Not out of the woods yet
Moneyreview warns that Greece must not let up now:
“A significant improvement in fiscal indicators, the rapid reduction of public debt, a boost to investment and reforms which, according to the agencies, will result in a more resilient Greek economy – nevertheless, the picture is not entirely rosy. ... Public debt remains among the highest in the Eurozone, while growth potential, productivity, external imbalances and demographic pressures continue to pose significant challenges. The message from the two agencies is therefore mixed: maintaining fiscal discipline and continuing with reforms will determine whether the improved credit ratings can be sustained.”
Benefits not trickling down
Households in Greece are seeing little evidence of the positive economic developments, Naftemporiki points out:
“The prime minister celebrated, stressing that Greece's image as an 'island of political and economic stability' had been confirmed. ... While there are economic figures that 'go through the roof' in charts and reports, there are also those 'stubborn' realities that Greeks know all too well from personal experience, without needing to consult international agencies. They simply go to the supermarket, pay their exorbitant rent or mortgage, fill up their car's tank at sky-high prices and brace themselves for a freezing winter because heating oil costs almost 1.75 euros per litre and natural gas is trading at over 80 euros per megawatt-hour on the European market.”