Scope Ratings credit rating agency gave a vote of confidence to Greece by upgrading on Friday its economy to “BBB” with a stable outlook, from “BBB-“ with a positive outlook.
Scope was the first agency recognized by the European Central Bank to give Greece an investment grade in August 2023 and is now the first to upgrade its creditworthiness within the investment grade.
Scope ratings and Greece’s debt
The reduction in public debt, the improved resilience of the banking system, and the stronger growth trend were the main drivers that led to the upgrade, according to the German agency.
“The upgrade to BBB reflects Scope’s expectation of a continued reduction in Greece’s general government debt ratio during the forthcoming years. This decline is seen being driven by favorable debt dynamics, alongside stronger-than-anticipated primary fiscal surpluses and an associated further narrowing of the headline budget deficit,” the agency says.
Greece aims to accelerate its debt reduction strategy, slashing roughly 20 percentage points off its debt-to-GDP ratio over the next four years, and will proceed with early repayment of outstanding debt for a third time later this year.
Greece’s finance ministry has committed to early repayment of some $8 billion in bilateral debt in 2026, 2027, and 2028, estimating that this would push down the country’s debt-to-GDP ratio – Europe’s highest – from 162 percent this year to 149 percent in 2025 and 133.4 percent by 2028.
Scope’s debt projections assume output growth of 2.2 percent for this year, 2.2 percent next and 1.6 percent on average from 2026 to 2029. The medium-run projection is nevertheless comparatively optimistic, currently reflecting no recession to 2029. In addition, Scope assumes GDP-deflator inflation of 2.5 percent during 2024-29, a significant assumption compared against a deflationary -0.4 percent average of 2012-21.
Downside risks for the agency’s baseline economic scenario include: i) a sharp economic downturn; ii) an unexpected return to lower inflation; iii) a sharp rise in borrowing rates; and/or iv) a material weakening of the budgetary position.
Resilience of the banking system in Greece
Scope Ratings highlights the “resilience of the banking system” which is reinforced by progress in the reduction of non-performing loans (NPLs), privatizations of systemic banks and the gradual amortization of deferred tax credits (DTCs) on bank balance sheets.
The performance of the four systemic banks – Alpha Bank, Eurobank, National Bank of Greece, and Piraeus Bank – has led to increased earnings forecasts and dividend payouts for the year. They are collectively projected to achieve net profits of €4.5 billion in 2025.
During the January-September period, the four banks recorded combined profits of €3.49 billion, a 22.66 percent increase compared to €2.85 billion during the same period last year.
The high profits of the Greek banks has led the opposition to call on PM Kyriakos Mitsotakis to impose a levy, a call dismissed by the government.
