S&P Keeps Greece at BBB as Debt Falls and Growth Holds

by · Greek City Times

S&P Global has reaffirmed Greece’s investment grade credit rating at BBB with a stable outlook, citing strong fiscal performance, resilient economic growth and continued reductions in public debt.

The US-based credit rating agency said Greece remains on track to record another primary budget surplus in 2026, forecasting a surplus equivalent to 3.8% of gross domestic product (GDP).

S&P attributed the expected result to stronger tax compliance, falling unemployment and improved government revenues, despite increased spending on public investment.

The decision makes S&P the fourth of the five rating agencies recognised by the European Central Bank to assess Greece’s creditworthiness during the second half of 2026.

Read more: Greece Gets Double Credit Boost as Mitsotakis Declares Economic Policy Vindicated

In September, Scope upgraded Greece to BBB+, while Moody’s and DBRS upgraded their outlooks to positive from stable, maintaining ratings of Baa3 and BBB respectively. Fitch is scheduled to deliver the final rating assessment for 2026 in November.

Greece’s Fiscal Performance Supports Rating

S&P said Greece’s economic performance has remained resilient despite successive external shocks, with investment and tourism continuing to support growth.

The agency highlighted the country’s membership of the eurozone and adherence to European Union fiscal rules as important safeguards against risks arising from its external economic imbalances.

However, it cautioned that Greece’s substantial external and public debt levels remain significant weaknesses, balancing its strong economic and fiscal performance.

S&P’s stable outlook reflects this combination of improving economic fundamentals and persistent debt-related risks.

The agency also expects Greece to outperform its fiscal targets in 2026. Monthly budget data through August indicated that the state budget was approximately €1.1 billion ahead of target.

Strong tourism receipts, further declines in unemployment and reforms designed to improve tax compliance were identified as key contributors to the stronger revenue performance.

S&P forecasts an overall budget surplus of 0.8% of GDP this year, including interest payments on public debt. This would exceed the government’s original target by approximately one percentage point of GDP.

The agency said the improved forecast comes despite expenditure exceeding budgeted levels and plans for additional domestically financed investment spending.

Public Debt Expected to Fall Further

Greece’s public debt trajectory remains a central factor in the credit assessment.

S&P estimates that net public debt, after accounting for cash reserves of approximately €33 billion, equivalent to 12.4% of GDP, will fall to 123% of GDP by the end of 2026.

That would represent a reduction of 40 percentage points compared with the end of 2019.

The agency expects continued fiscal discipline and steady nominal economic growth to drive further reductions, projecting the debt ratio will reach 107% of GDP by the end of 2029.

S&P also forecasts that Greece will maintain overall budget surpluses in the coming years, averaging 0.2% of GDP between 2027 and 2029. The primary surplus is expected to average 3.2% over the same period.

Investment and Tourism Drive Growth Outlook

S&P identified tourism and investment as the main engines of Greece’s economic expansion, with investment receiving significant support from the European Union’s Recovery and Resilience Facility.

The programme is now entering its final phase, while an extensive pipeline of planned investments is expected to support economic activity over the coming years.

The agency also noted that Greek income levels are gradually moving closer to the European average, supported by continued investment and potential further improvements in the labour market.

S&P forecasts that the Greek economy will grow by an average of 2.1% annually between 2027 and 2029.

Under its projections, GDP per capita would reach approximately US$35,100 by 2029, equivalent to around 55% of the EU average, compared with 47% in 2019.

What Could Trigger an Upgrade or Downgrade?

S&P said it could raise Greece’s credit rating if the country achieved a substantial and sustainable improvement in its external imbalances.

Possible factors include reducing the economy’s reliance on imports and achieving a significant reduction in external debt, much of which is owed by the public sector.

Conversely, the agency warned that a substantial deterioration in Greece’s fiscal performance could lead to a downgrade.

The reaffirmation of the BBB rating keeps Greece within investment grade territory, reflecting progress in public finances and economic resilience while underscoring the importance of continued debt reduction and fiscal discipline.

Source: S&P Global, as reported by the Athens-Macedonian News Agency (AMNA).

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