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Fitch upgrades Greece to 'B-' from 'CCC'

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Staff Writer | August 21, 2017
Fitch Ratings upgraded Greece’s long-term foreign-currency issuer default ratings to ‘B-’ from ‘CCC’ and assigned positive outlooks on the ratings.
Greece Fitch
Europe   A surplus of 842 million euros for Greece
Fitch cited the on-going compliance with the terms of the European Stability Mechanism program, and reduced political risk, sustained GDP growth and additional fiscal measures legislated to take effect through 2020 will steadily lead to improvement of the general government debt sustainability.

“The successful completion of the second review of Greece's ESM programme reduces risks that the economic recovery will be undermined by a hit to confidence or by the government building up arrears with the private sector,” it said late Friday.

Also, the positive outlook reflects Fitch's expectation that the third review of the adjustment programme will be concluded without creating instability and that the Eurogroup will grant substantial debt relief to Greece in 2018.

“In Fitch's view, the political backdrop has become more stable and the risk of any future government reversing policy measures adopted under the ESM programme is limited.”

As regards as banks, Fitch cautioned that confidence in the banking sector remains fragile although it is improving.A" key challenge for the banking sector is tackling non-performing exposures (NPEs), which remain stubbornly high at 45% of gross loans," said.

Greece's current account balance posted a surplus of 842 million euros in June, down 68 million euros y-o-y, according to data from the Bank of Greece. In the first half of the year, current account showed a deficit of 2.8 billion euros, almost unchanged from the year-ago figure.

In June, the goods deficit widened by 24 million euros due to the higher deficit of the oil balance, while the non-oil balance of goods improved as exports rose more than imports.

“It should be noted that non-oil exports of goods rose by 11.4% and oil exports by 9.6% at constant prices,” the central bank said.

Also, the services balance grew by 221 euros million due to an increase of 257 million euros in the surplus of the travel balance, as in June 2017 non-residents' arrivals and the corresponding receipts rose by 13% and 14.2%, respectively, y-o-y.