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Rating agents would upgrade Greek bonds.

 

Acropolis
Greece is on the cusp of regain­ing its invest­ment-grade credit rat­ing after 12 years in the junk-bond wil­der­ness, cent­ral bank gov­ernor Yan­nis Stourn­aras has said as he urged the next gov­ern­ment to main­tain fiscal prudence. Stourn­aras said he was «con­fid­ent» that credit rat­ing agen­cies would upgrade Greek bonds within months, should law­makers sig­nal their intent to main­tain reforms and take advant­age of a «win­dow of oppor­tun­ity» to lower the coun­try’s debt bur­den sig­ni­fic­antly. «We think 2023 is the year we’ll get the invest­ment grade,» Stourn­aras said. Stourn­aras said the most likely tim­ing of the upgrade was «imme­di­ately after the elec­tion», but it could even come before the vote took place.

Greece lost its invest­ment-grade status in Janu­ary 2011 after its eco­nomic crisis threatened to break the euro­zone apart. «A few years ago, few people expec­ted Greece to remain in the euro­zone. Now, not only does it remain, but it per­forms bet­ter than the euro­zone aver­age,» the gov­ernor said. Stourn­aras, who has headed the cent­ral bank since 2014, warned that this «benign cycle» must not be squandered and called on the gov­ern­ment to make some des­per­ately needed invest­ments in the coun­try’s battered infra­struc­ture fol­low­ing a rail­way crash that has claimed the lives of at least 57.

«Greece has man­aged to cor­rect mac­roe­co­nomic imbal­ances and improve price and wage com­pet­it­ive­ness, but struc­tural com­pet­it­ive­ness remains low com­pared to other euro­zone mem­bers,» he poin­ted out. Des­pite the gains of recent years, Greece still holds the highest debt load in the euro­zone at 170 per cent of its out­put. Under the terms of its bail­out, offi­cial cred­it­ors took on a large chunk of Greece’s debt while char­ging rel­at­ively low-interest rates for the gov­ern­ment to ser­vice it up until 2032. «We have a win­dow of oppor­tun­ity that should not be wasted,» Stourn­aras said.

«We need to bring down the debt-to-GDP ratio to such a level that nine years from now, the interest pay­ments, which are now under a grace period, will not cre­ate a new debt prob­lem». Its pres­id­ent, Christine Lagarde, has said the cent­ral bank is «very, very likely» to raise its deposit rate from 2.5 per cent to 3 per cent at its March 16 meet­ing, warn­ing «infla­tion is a mon­ster that we need to knock on the head».

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  1. Jose8 March 2023 at 16:33

    I don't think Greece is ready for this. Not yet. They still need 1-2 years in the oven. And let's see what the new government brings.

    ReplyDelete

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