The two conditions to upgrade Greece

The two conditions to upgrade Greece
The two conditions to upgrade Greece

By Leonidas Stergiou

Late at night, last Friday, almost at the same time as Moody’s, the rating agency DBRS also published its own report on the creditworthiness of the Greek economy, leaving the rating unchanged. In that report there were three notes, which concerned risks that could lead to an upgrade or a downgrade. The two factors were common and related to the positive or negative course of fiscal and reforms, respectively. The third factor was only mentioned in the case of a downgrade and this was related to a possible resumption of financial instability.

The contacted Mrs. Nichola James, the head of the team that co-signed the DBRS assessment report for Greece. The first question was about whether the house sees any risk related to the banks and, for that reason, is mentioned in the report as a possible downgrade factor. The second part of the questions were related to the factors that could affect the reform and fiscal course.


In response to the first question, regarding the Greek banking system, Mrs. James explained that “by the term financial instability we refer to banking and financial stability risks that could be transferred to the state.”

He clarified that “Greek banks continue to make progress in reducing their impaired assets (including NPLs), mainly due to the sales and securitization of loans under the “Hercules” program, but the NPE ratio remains the highest in the euro area”.

Risk of new bad loans

Speaking about the trends she sees in this matter, Mrs. James estimates that “from now on, balance sheet consolidation will continue, albeit at a slower pace. At the same time, the withdrawal of pandemic support measures, as well as the economic and financial effects of the conflict in Ukraine, including the energy crisis, could lead to new NPE flows”.

Wiretapping and elections

On the question of wiretapping and the difficulty of forming a government, developments that could be taken into account by a political risk rating agency, for possible delays in reforms and possible worsening of fiscal conditions, Ms. James believes that the overall positive picture of of the Greek economy is not affected. Nevertheless, they are factors that increase the risk, but in the short term.

Political stability

Specifically, Mrs. James replied that “in recent years Greece has enjoyed a stable political environment and good cooperation with its counterparts and the EU institutions, which firmly establishes Greece in the euro system”. At this point she adds that as a house “we continue to expect political continuity, with the implementation of the “Greece 2.0″ economic program moving forward and the Recovery Fund (RRF) providing incentives to continue reforms.”

As she later explained, “we do not expect the wiretapping scandal to materially affect Greece’s overall performance, although it could add an extra layer of difficulty to forming a government after the election, which could lead to delays in implementation of reforms”.

Conditions for upgrading

Returning to the factors that DBRS takes into account in the ratings, Ms James said they are also clear about those “that could lead to an upgrade if one or a combination of the following occurs: First, continued implementation of reforms that boost investment, thereby improving the long-term economic outlook. Second, a continued commitment to fiscal consolidation that keeps the public debt ratio (s.p.a. to GDP) on a downward trajectory.”

The article is in Greek

Tags: conditions upgrade Greece

PREV “Greece should stay away from challenges that will lead to destruction”
NEXT Stamatis Kokotas – “My Son”: The true story behind his great success