As what came as a surprise, Moody's rating agency upgraded Greece's rating from B1 to Ba3 with a stable outlook despite the global economy dropping because of the COVID-19 pandemic.
Although Moody’s estimates the Greek economy will shrink by 9% this year, the rating agency said Greece will have a strong rebound and keep growing in the medium term by 3.5% per year.
In response to the surprising announcement, Greek Prime Minister Kyriakos Mitsotakis said on Twitter "Moody’s upgrade of Greece's rating, which came in the midst of a global recession, is a strong vote of confidence in the growth prospects of the Greek economy post Covid."
”Ongoing reforms support a sustainable improvement in institutional strength and have already brought tangible progress in areas including tax administration and compliance and the fight against corruption,” the agency said in its report.
"In Moody's view the risk of reversal of these important improvements is low. Moody's considers this action to be motivated in part by governance-related factors under its ESG framework,” the agency report explained.
“The country's growth prospects over the coming years are positive notwithstanding the negative near term impact of the pandemic particularly on the tourism sector. Greece's economy will benefit from ongoing efforts to improve the investment climate coupled with inflows of very substantial European recovery funds," the report continued.
"Favorable growth prospects, combined with a return to a prudent fiscal stance, will lead to a gradual reversal in the public debt trend. In addition, Greece benefits from a very favorable debt structure and strong affordability,” it noted.
“This is a particularly positive development for our country,” stated Finance Minister Christos Staikouras late on Friday. “This rating took place in conditions of unprecedented recession in the global economy and in the national economies, as well as of high uncertainty caused by the pandemic."
“It constitutes evidence of increased confidence in the country and the government for the management of the current crisis, its reforms, and the overall prospects of the Greek economy,” added Staikouras.