Moody’s upgrades Greece’s rating outlook to positive — Cyprus Mail
Moody’s Ratings has raised the outlook on Greece’s sovereign credit rating from “stable” to “positive,” while affirming the country’s investment-grade Baa3 rating. As Cyprus Mail reports, the decision was explained by increasingly visible signs that structural economic and institutional reforms are strengthening the country’s resilience.
Moody’s said that improvements in economic and fiscal resilience exceed the agency’s current expectations. This could raise structural economic growth rates and strengthen the government’s ability to continue the multi-year reduction of public debt, including through further early repayment of obligations accumulated during the financial crisis.
Reforms and investment
The Baa3 rating reflects the results of reforms, favorable debt sustainability indicators, and a notable improvement in public finances, the agency said. Moody’s pointed to changes in tax administration, business licensing, insolvency procedures, the judicial system, land management, spatial planning, labor taxation, and skills development policy.
According to Moody’s, the reforms are gradually easing long-standing constraints on investment and resource allocation, while encouraging more companies to operate in the formal sector. The changes have been accompanied by growing employment and exports, as well as healthier private-sector balance sheets. The agency estimated Greece’s potential growth at about 1.5%.
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Private investment accounted for nearly two-thirds of the five-percentage-point increase in the investment-to-GDP ratio since 2020. In Moody’s view, this indicates that the investment recovery was not merely a temporary effect of the EU Recovery and Resilience Facility, but that its funding rather reinforced an already existing trend.
Debt and fiscal indicators
Greece’s public debt, according to Moody’s, fell to 146.1% of GDP in 2025 from 154.2% in 2024 and a peak of 209.4% in 2020. The agency forecasts that it will decline to 120% of GDP by 2030, supported by a primary budget surplus of around 2.5–3% of GDP.
At the end of 2025, the country repaid €5.3 billion of debt early and plans to pay another €13 billion by the end of 2026. Moody’s also noted that the digitalization of payments and employment has narrowed opportunities to conceal income: the VAT compliance gap is estimated at around 9% in 2024, compared with 24% in 2019.
At the same time, the agency cited high public debt, significant external deficits, moderate labor productivity, non-performing debt outside the banking system, and long-term demographic pressure on labor supply and economic growth among the challenges.
