On Friday, the credit rating agency Fitch affirmed Greece’s credit rating at BBB with a stable outlook, noting that its rating reflects the country’s higher per capita income and better governance compared to the average of countries in the BBB category, which are offset by very high, albeit rapidly declining, public debt, persistent external imbalances, and structural constraints on growth.
Fitch also cited as Greece’s strengths its credible policy framework, anchored in its membership in the EU and the Eurozone, as well as its strong fiscal performance, prudent policies, and resilient growth, which have strengthened fundamentals and accelerated the reduction of public debt.
ΣΧΕΤΙΚΑ ΑΡΘΡΑ
Key Factors Influencing the Rating
The agency specifically cites the following reasons for its rating:
– Rapid debt reduction: Greece’s extremely high public debt remains a key limiting factor for the rating; however, its rapid reduction continues to enhance debt sustainability and underpin the “BBB” rating. “Public debt reached 146.1% of GDP in 2025, and we project it will decline further to 124.6% in 2028, thanks to large primary surpluses, steady growth in nominal GDP, the favorable spread between interest rates and growth, and active debt management, including early loan repayments. Although it remains well above the average for countries with a “BBB” rating, which stands at 56.9% of GDP, according to our forecasts, Greece will no longer have the highest debt-to-GDP ratio in the Eurozone by the end of 2026, as it will be lower than Italy’s.”
– Low financing risks: Greece’s debt repayment capacity and liquidity profile mitigate the risks associated with its still-high debt stock. The Greek government benefits from a very long average debt maturity of 19 years, a high proportion of debt with favorable terms and fixed interest rates, as well as a large cash buffer, which is projected to reach approximately 12% of GDP in 2026. The implicit interest rate on the debt remains low, at around 1.5%, below the expected nominal GDP growth of about 4%. “These characteristics reduce the risk of debt refinancing, support market access, and provide resilience against financial market volatility.”
– Significant fiscal surpluses: Greece’s rating is supported by exceptionally strong fiscal performance compared with countries with a similar rating. “We project a general government surplus of 0.6% of GDP in 2026—compared with a projected average deficit of 3.1% for countries with a “BBB” rating —and a primary surplus of 3.6%. Revenue growth continues to outpace expenditure growth, supported by strong tax revenues, social security contributions, and improved tax compliance.
– Prudent policy: Greece’s commitment to sound public finances has become a more enduring strength in the assessment. “The post-pandemic results demonstrate a strong track record of fiscal prudence, supported by broad political and social backing for a conservative policy. This is reinforced by institutional anchors, such as the 2025 domestic fiscal rule requiring a primary surplus and the EU fiscal framework. These reinforce the policy’s credibility and the confidence that any fiscal easing will remain limited. We view the looser fiscal stance for 2027 as a response to better-than-expected performance rather than as weaker fiscal discipline.”
– Investments at the forefront of growth: Macroeconomic performance remained resilient despite the weaker external environment and increased uncertainty. “We project that growth will average 2% over the 2026–2028 period, indicating continued outperformance relative to the euro area average. Domestic demand, particularly investment and private consumption, is the main driver. Projects related to the “Next Generation EU” program, public investment, and future EU funding are expected to continue supporting fixed capital formation and medium-term growth. However, risks of a slowdown remain, mainly due to the external environment and domestic implementation risks associated with the significant role of investment in our baseline scenario.”
– Long-standing structural weaknesses persist: The improvement in Greece’s growth profile is offset by persistent structural constraints. “The increase in investment is helping to replenish the capital stock after a long period of underinvestment and supports medium-term convergence, but the economy still bears significant scars from the debt crisis. Real GDP remains well below its pre-crisis peak, and GDP per capita remains low relative to the EU average. Labor market performance has improved significantly, with unemployment continuing to decline, but skill shortages and other structural barriers suggest that constraints on productive capacity remain.”
– Weak external balance of payments: Membership in the eurozone mitigates external financing risks, but Greece’s external position remains a key weakness in the assessment. “We project that the current account deficit will rise to 6.5% of GDP in 2026, with only a gradual decline over the medium term. Large external deficits reflect structurally low domestic savings, while import-intensive investment is likely to continue putting pressure on the external balance. Strong tourism revenues, EU-related inflows, and foreign direct investment support financing but are unlikely to substantially strengthen external indicators.” High energy dependence also exposes Greece to import price shocks, contributing to inflation higher than the eurozone average in 2026.”
– Strengthened banking sector: “The risks that banks pose to the government remain, in our view, under control, as the sector is significantly stronger and more resilient than in the past. Profitability, liquidity, and capitalization remain satisfactory, limiting the likelihood of a need for government support. Asset quality has deteriorated only slightly, due to the restructuring of legacy retail exposures, while banks continue to maintain strong funding capacity and market access. Macroprudential frameworks and measures targeting borrowers also help limit the build-up of systemic risks. Structural vulnerabilities remain, including continued significant reliance on deferred tax assets and exposure to external shocks or market revaluations.”
– ESG – Governance: Greece ranks in the middle percentile of the WBGI index (63.2%), reflecting a recent history of peaceful political transitions, a moderate level of rights to participate in the political process, moderate institutional capacity, a well-established rule of law, and a moderate level of corruption.”
