Greece’s Economic Developments: A Path to Recovery

Greece is poised for significant economic developments as it plans to raise €11 billion from bond markets in 2025, following recent upgrades from rating agencies and a stable fiscal outlook. This move is part of a broader strategy to enhance economic resilience and foster sustainable growth in the wake of past financial challenges.

Key Takeaways

• Greece’s Long-Term Foreign-Currency Issuer Default Rating (IDR) affirmed at ‘BBB-‘ with a stable outlook.
• Plans to raise €11 billion from bond markets in 2025, nearly doubling net borrowing needs.
• The European Investment Bank (EIB) President to visit Greece to discuss new investment initiatives.

Fitch Ratings Affirms Greece’s Credit Rating

Fitch Ratings has affirmed Greece’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BBB-‘ with a Stable Outlook. This affirmation reflects Greece’s improved fiscal position and governance indicators that align with the ‘BBB’ median. Key factors supporting this rating include:

1. Prudent Fiscal Stance: Greece has achieved a budget deficit of around 1% of GDP, significantly better than the EU average.
2. Credible Fiscal Framework: The government has committed to maintaining a budget deficit below 3% of GDP and reducing the debt-to-GDP ratio.
3. Falling Public Debt: The debt-to-GDP ratio is expected to decline below 140% by 2028, down from 164% at the end of 2023.
4. Low Financing Risks: Greece’s favorable debt profile and large cash reserves mitigate market risks.

Plans for Bond Market Engagement

In 2025, Greece plans to intensify its presence in the bond markets, aiming to raise €11 billion. This increase in borrowing is driven by:

• A projected state budget deficit increase to approximately €4.4 billion.
• Recovery Fund loans amounting to €3.7 billion.
• Additional financing needs related to state participation in companies’ share capital increases.

The total financing needs for 2025 are estimated at €14 billion, combining net borrowing and public debt service obligations.

EIB’s Role in Economic Growth

The President of the European Investment Bank (EIB), Nadia Calviño, is scheduled to visit Greece to discuss new investment initiatives. This visit marks a significant step in fostering collaboration between the EIB and the Greek government. Key areas of focus include:

• Modernization of water management and transport infrastructure.
• Affordable and sustainable housing projects.
• Climate action and energy investments.
• Facilitating access to finance for small and medium-sized enterprises.

Since 1963, the EIB has invested nearly €50 billion in Greece, contributing to economic growth and social cohesion.

Conclusion

Greece’s economic landscape is showing signs of recovery, bolstered by strategic financial planning and international support. The upcoming bond market engagement and EIB initiatives are expected to play crucial roles in enhancing the country’s economic resilience and paving the way for sustainable growth in the coming years.

Sources

• Fitch Affirms Greece at ‘BBB-‘, Outlook Stable, η ναυτεμπορικη.
• Greece planning to raise €11 billion from bond markets in 2025 | eKathimerini.com, eKathimerini.com.
• Tornos News | EIB chief to visit Greece to discuss new investment initiatives, Tornos News.
• Greece to raise 11 billion euros from bond markets in 2025 | Capital, Capital.gr.