Fitch maintains stable outlook on Greece

Fitch Ratings has affirmed Greece’s long-term foreign and local currency issuer default ratings (IDR) at ‘B-’ and a ‘stable’ outlook, while it has upgraded the country’s short-term country ceiling rating to ‘B+’ from ‘B’. This follows the two-notch rating upgrade from Moody’s on Friday.
Fitch said that “Greece is on course to eliminate longstanding macroeconomic imbalances and there has been no repetition of the protracted delays in EU-IMF disbursements that marred previous years”. The rating agency expects negotiations with the Troika to reach a satisfactory conclusion by year-end.
According to Fitch, Greece is fully funded until February 2014 and acknowledged that there are programme funding shortfalls of EUR 11 bln in 2014-15, that could be covered via several options.
The rating agency also said that “the Greek economy's ability to adjust and recover is crucial to the restoration of sovereign creditworthiness. To date, adjustment has taken place chiefly through recession and unemployment. Recovery still hangs in the balance. However, the rate of contraction of real GDP has slowed to 3% in 3Q from 5.6% YoY in 1Q, while unemployment appears to be levelling out, albeit at a record high of 27%”.
Fitch has revised its real GDP forecast for 2013 to -4% from -4.3%, leaving 2014 unchanged at 0.5%. The degree of primary fiscal adjustment – around 11% of GDP in 2009-13, excluding bank recapitalisation costs – has been remarkable, while Fitch expects gross general government debt (GGGD) to stabilise at 176% of GDP in 2014.