Moody's Investors Service upgraded Greece’s government bond rating to Caa3 from Caa1 outlook stable. The fact is that this EU country is gaining ground in the international arena. The improvement in Greece outlook is based on the facts that the budget deficit plummeted and the public debt ration follows downtrend trajectory. According to Moody’s experts, debt-to-GDP ratio is likely to decline in 2015 after peaking at about 179% of GDP this year.
While making the final decision, the analysts paid special attention to political instability in the country and high probability of early parliamentary elections. “Moody's believes that the prospect of early elections, the result of which is highly uncertain, increases the risk of delays in policy implementation at a critical juncture of the economic adjustment program,” the official statement says. Besides, the uncertainty is heightened by the ambiguity associated with the end of EU and IMF programs in December 2014 and Q1 2016, respectively. Greece’s government is planning to meet Troika this autumn in order to ask the lenders to ease the debt burden of €240 billion.
Special commission of the European Union and the International Monetary fund will consider whether the measures the Greek authorities have taken to revive the economy and restore the economic indicators correspond to those which were specified as lending conditions. Economists at Moody’s pointed out that the structural economic reform produced “mixed results”, but they added that the Greek government has got ahead in labor market reforms and liberalization of some areas of product markets. “These reforms have led to wage and price adjustments, which far outstrip adjustments elsewhere in the euro area periphery,” Moody’s writes.
