Fitch Ratings upgraded the long-term credit rating of Greece to BBB from BBB-, with the review prospects (outlook) being stable, fully confirming a related report by Bankingnews (BN).
As Bankingnews had written, the main reason for the upgrade will clearly be banking stability and growth; the banks have become a pole of stability.
However, the ratings of credit rating agencies have ceased to carry as much weight, since the ECB overshadowed their methodology with quantitative easing programs…
It should be noted that Greece has 404 billion in debt with GDP approaching 250 billion euros...
Detailed Fitch forecasts:
Steady reduction of debt
It is projected that gross general government debt as a percentage of GDP will fall by 9 percentage points in 2025, reaching 145%, after dropping 10 points in 2024.
Although it remains about three times the average of the ‘BBB’ category (52%), it is now more than 60 points below the 2020 historical peak (209%), marking the largest post-pandemic decline among the states rated by Fitch.
It is expected that debt will continue to decrease rapidly, approaching 120% by 2030, supported by about 4% nominal GDP growth and primary surpluses of 3.5% of GDP after 2027.
Cash reserves remain at historically high levels, around 18% of GDP, allowing the early repayment of bilateral bonds and covering maturities for the next three years.
Strong fiscal performance
Fitch forecasts that in 2025 the government will achieve a surplus close to 1% of GDP, similar to the 1.3% of 2024, while the primary surplus will reach 4.8%.
This is a remarkable improvement compared with the 1.4% deficit of 2023 and is far better than the 3.7% average deficit of the ‘BBB’ category.
The strong performance is due to structurally higher revenues from improved tax compliance and tight expenditure control.
Because of the strong starting point, the 2026 budget is expected to remain in surplus despite the relaxation measures included in the plan.
The planned reductions in personal income tax will have the greatest fiscal impact, estimated at 1.2 billion euros (0.5% GDP) in 2026 and 1.6 billion euros in 2027.
This will boost the real disposable income of middle households and support growth.
An additional 600 million euros will be allocated for rent subsidies and support for low-income pensioners, and 300 million euros for wage increases in the defense sector.
Fiscal framework
The recent results and the 2026 plans highlight the government’s strong commitment to fiscal discipline. “We consider this commitment particularly credible, as it is supported by post-pandemic outcomes and by broad social consensus in favor of sound fiscal policy.
In July 2025, the Parliament adopted with a large majority a domestic fiscal rule requiring a balanced primary position. Greece exceeded the requirements of the new European fiscal framework in 2024, the first year of its implementation,” it is noted.
Low financing risks
The favorable debt profile of Greece - average maturity 19 years, low interest costs, and very high cash reserves - significantly reduces market risks and acts as a “buffer” against potential turbulence in the bond markets.
The underlying growth–interest rate profile is favorable, with the implicit interest rate on debt at about 1.5%, much lower than nominal GDP growth (about 4%).
Resilient economic growth
The Greek economy is on a stable growth path despite external challenges (geopolitical and trade-related). Since 2023, growth has been around 2%, exceeding the eurozone average.
We forecast that growth will remain around 2% until at least 2027, with continued convergence toward the eurozone income level.
Growth will be supported mainly by domestic demand, the final years of Recovery Fund stimulus, improved household balance sheets, and the steady increase in employment.
Widened and persistent current account deficit
The current account deficit (CAD) has remained close to 6% of GDP since 2023, much higher than the 0.3% average of the ‘BBB’ category.
No improvement was recorded in the first half of 2025.
Structurally, the low savings rate is the main cause, and import-intensive investments are expected to maintain the pressure.
Participation in the eurozone reduces external financing risks, and we do not expect disruptions to capital inflows.
Strengthened banking sector
Fitch upgraded in 2025 the ratings of the four systemic banks to investment grade, reflecting the improvement in their operating environment and credit profiles.
Key factors: strong profitability, completion of non-performing asset clean-ups, strengthened capital base, and stable deposit base.
“We expect the banking sector to benefit from resilient growth and the gradual recovery of retail banking.”
The issue of Deferred Tax Credits (DTCs) remains, accounting for about 45% of the banks’ CET1 capital (12 billion euros, June 2025).
The deferred tax claims (DTCs) continue to constitute a contingent liability of the State, unique in the eurozone, despite plans to accelerate their amortization.
In addition, state guarantees for the senior tranches of the ‘Hercules’ (HAPS) scheme - aimed at reducing non-performing loans - amount to 18 billion euros or 8% of GDP 2025 (September 2025).
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