The Fitch ratings agency on Friday upgraded Greece's sovereign debt grade, citing budget surpluses, greater political stability and the growing economy. The agency raised the debt rating one notch to 'B' from 'B-,' leaving the country in the "highly speculative" category but with a positive outlook.
The decision followed a similar move last month by S&P Global Ratings, which said the long-suffering economy's improving fiscal situation was coinciding with growing employment. Long the "sick man of Europe," Greece is expected to face smoother sailing, with Eurozone finance ministers expected to sign off on the review of its performance under as its financial aid program, which runs through August 2018.
The eurozone also is expected to provide "substantial debt relief" this year, Fitch said. "The concessional nature of Greece's public debt implies that debt servicing costs are low despite the high stock of public debt," Fitch said in announcing its decision.
The agency noted that Greece saw three straight quarters of GDP growth for the first time in 11 years, causing per capita incomes to rise as well, while political risks have receded. Between 2015 and 2017, the government of Prime Minister Alexis Tsipras adopted painful measures under the bailout program and "we think it would be politically difficult for the same government to backtrack" once the program ends, Fitch said.
Greece has also recorded rising budget surpluses and while the banking sector remains weak, banks have committed to plans to reduce their non-performing exposures by the end of next year, Fitch said.
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