Moody’s sees debt profile improving

Moody’s projects a gradual decline of the Greek public debt to gross domestic product ratio and its return to pre-pandemic levels or even lower by 2025.

In a report on Wednesday the rating agency marked the country’s fiscal strength as very resilient in terms of if there were to be a possible new fiscal shock over the next four to five years; and that’s thanks to the very strong growth the Greek economy is expected to record, as well as the very low level of borrowing costs.

Furthermore, Greece’s return to significant primary budget surpluses is expected to reduce the debt level even more intensely, Moody’s noted. It went on to stress that, generally, the major challenge for governments will be for them to make the most of the low interest rates in order to slash their primary surpluses and reverse the momentum of their debt before interest rates start rising again.

As the analysts of the rating agency point out in their report, the longer it will take some states to restore some form of fiscal flexibility, the more vulnerable they will be to any external shocks which may occur over that period.