The Greek economy is in a different phase from that of the previous decade, with market confidence having strengthened and the country having returned to investment grade, Giannis Stournaras pointed out while speaking at the Annual Meeting of the Rating Agency Scope.
In his speech in Athens, the Governor of the Bank of Greece, Giannis Stournaras, highlights the role of credit rating agencies in the functioning of markets and in financing the economy. At the same time, he presents the factors supporting the improvement of Greece’s image, from fiscal consolidation and the course of debt to the resilience of the economy and reforms. The next goal, as he notes, is the further institutional strengthening of the country.
In detail:
It is with great pleasure that I welcome the Annual Meeting of the Rating Agency Scope here in Athens. The landscape we see – the open horizon and the sea that unites, although at times it is rough – provides the cue for an apt metaphor for the European project itself: a long journey of integration, adjustment and shared responsibility, through which we built institutions that brought us stability and prosperity.
Credit rating agencies are part of this institutional architecture. Scope Ratings provides independent and thorough credit risk assessments, thus contributing to the reduction of asymmetry in investor information and thereby enabling them to allocate their capital more effectively.
It is the first European rating agency and is accepted as an external credit assessment institution under the Eurosystem Credit Assessment Framework (ECAF). In this sense, the vision of Mr. Schoeller, still young when he founded Scope, has been fulfilled to the fullest extent.
At the present juncture, we are faced with a major challenge: as Europe seeks to expand its market-based financing and deepen the integration of its financial market, rating agencies will play an even more important role. The main purpose of rating agencies, a sector that already counts more than 100 years of existence, is to provide valuable information to investors about the creditworthiness of debt issuers in capital markets.
Reliable credit ratings can also be a useful tool for issuers, as they help them broaden their investor base, facilitate the cross-border allocation of capital, and contribute to the deepening and increased liquidity of debt securities markets. The importance of credit ratings was recognized by the European regulatory framework after the global financial crisis of 2007-09.
And of course, their importance is demonstrated by market behavior. Recently, the downgrades of the credit rating of US federal bonds triggered concerns about their safety as assets. However, raising doubts about the safety of a benchmark bond inevitably also affects the pricing of bonds internationally.
In European states with weaker fiscal positions or facing greater political uncertainty, we saw the yield spreads on their bonds, the so-called spreads, widen more than those of other euro area economies. This development shows that investors are concerned about public finances and the political situation in these countries, beyond concerns about prolonged inflation.
However, in the euro area we have the advantage of having a central bank whose independence is legally guaranteed, and its credibility stabilizes inflation expectations and helps shield long-term bond yields against concerns about the dominance of fiscal policy over monetary policy (fiscal dominance).
Unfortunately, the independence of central banks is being called into question in certain advanced economies outside Europe. An opportunity therefore emerges for the Old Continent to increase its international role by increasing the supply of safe assets, proceeding with joint bond issuances at the European level.
Amid the energy disruption caused by the conflict in the Middle East, the euro area economy is showing resilience. In the second quarter of 2026, real GDP grew by 1.2% year-on-year, while employment continued to increase. The resilient labor market, increased external demand due to the ongoing global boom in artificial intelligence, and increased spending on defense and infrastructure helped the European economy partially absorb the disruption.
At the same time, the Greek economy is also showing remarkable resilience, maintaining higher growth rates than the euro area. Despite successive exogenous disruptions and increased uncertainty, economic activity continued to expand, with real GDP increasing at an annual rate of 1.9% in the second quarter of 2026, much higher than the euro area average.
This resilience is not accidental. It reflects the strong fundamentals of the economy achieved in recent years thanks to fiscal consolidation, the recovery of the banking system, the improvement of the business environment, and ongoing reform efforts. All these contributed to the successive upgrades of the country’s creditworthiness and strengthened investor confidence.
The Bank of Greece had repeatedly emphasized in the past the importance, if not the necessity, of Greece regaining investment grade. Before the 2023 upgrade, a study by the Bank of Greece showed that regaining investment grade would lead to a reduction in the yield spread of the Greek government bond against the corresponding German bond by about 70 basis points.
Indeed, Greek government bond spreads are now approximately 60 basis points lower than they were on 4 August 2023, when Scope Ratings was the first Eurosystem-accepted rating agency to assign Greece a credit rating within the investment grade category.
Therefore, Greece is a shining example of the benefits of fiscal prudence. Despite significant volatility in global bond markets, Greek government bond spreads have recorded only a moderate increase since the beginning of the year, in contrast to the situation prevailing just before the global financial crisis, when the abrupt repricing of sovereign bond risk brought to light fiscal vulnerabilities in all European states and especially in Greece.
At the Bank of Greece, we have developed analytical tools that enable us to extract timely information from Greek government bond prices regarding perceived credit risk. According to our studies, Greece is priced by the bond market closer to states with an A credit rating than to states with a BBB rating.
In this sense, the market, which in ancient Athens was the place of democratic decision-making, confirms the upward course of the credit rating of the Hellenic Republic. This should not be considered as anticipating future credit rating decisions, but it is a useful indication of the extent to which the market’s perception of Greece’s public debt risk has changed.
Studies by the Bank of Greece confirm that the credit ratings of rating agencies are so far consistent with the fundamentals of the Greek economy. Among the main factors that contributed to the upgrades are sustainable fiscal surpluses, the steadily downward trajectory of public debt, but also lower political risk, which is also reflected in Greece’s improved ranking in the World Bank’s Political Stability Index.
These favorable economic developments are expected to continue in the medium term. According to the Bank of Greece’s projections, the interest rate-growth differential for the Greek economy will remain favorable over the medium term, as the implicit interest rate, including deferred interest, is expected to remain below the growth rate of nominal GDP. As fiscal risks remain limited, yields on Greek government bonds are rising in parallel with inflation, as is also the case with yields on the corresponding German bonds.
This means that we can expect this favorable debt dynamic to be maintained in the coming years as well.
In my view, for Greece to receive an A credit rating before 2030, continuous improvements in the quality of institutions are required. In the short term, the recent reforms in public administration should begin to gradually translate into higher scores for the country in the institutional indicators also monitored by rating agencies.
Important steps forward have also been made in the judicial system. The reform of Greece’s judicial map has already produced tangible results: according to the JustStat database, the average time for the issuance of a first-instance decision was reduced by at least half, specifically to about 1 year (357 days) from more than 2 years (774 days) before the reform.
The Ministry of Justice expects that the time required for a final judgment will converge with the European average by 2027. These improvements matter to investors. Faster and more predictable judicial procedures strengthen legal certainty and investor confidence.
Above all, however, what we see in Greece is a change in mindset. During the crisis, credit ratings were often treated as an external constraining factor on financing. Today, they are increasingly used as critical information in the analysis of financial markets and in investment decisions.
Moreover, instead of questioning the need to achieve upgrades, more and more Greek companies are now aiming for positive assessments of their creditworthiness, which will facilitate their access to financing through the markets. This change in mindset can contribute to the diversification of funding sources for the Greek economy, all the more so now that Europe is promoting the Savings and Investments Union.
More generally, recent experience has clearly shown that we must advance the European project. And for this purpose, we need views and assessments of European economic developments that are independent of exogenous geoeconomic influences. Therefore, the Annual Meeting of the Rating Agency Scope in Athens is an excellent occasion, and I am particularly pleased to welcome today Europe’s first Eurosystem-accepted credit rating agency.