Greece Debt Falls, But Ratings Want More Reform

Moody’s, which upgraded Greece’s outlook to positive while keeping the rating at Baa3, said continued nominal growth, high primary surpluses and the use of cash buffers to repay debt are keeping the debt ratio on a steep downward path. The agency expects debt to fall to 120% of GDP by 2030, from about 136% this year, as the government’s targets point to a decline to 130.3% in 2027, 123% in 2028, 117.6% in 2029 and 113.2% in 2030, before slipping below 110% in 2031 and toward 100% by 2034-2035.

But Moody’s said that “continued commitment to debt reduction would favour an upgrade” while warning that “this alone is not enough.” What it wants instead is a credible, multi-year package of structural and institutional reforms that can lift medium-term growth, alongside steps to address Greece’s negative net international investment position and its demographic drag. In other words, ratings firms are not just measuring solvency; they are assessing whether Greece can raise its potential growth rate and strengthen its external balance.

Scope Ratings offered a similar message. It said Greece’s debt targets are fully achievable and lifted the country to BBB+, at the same level as Italy, but argued that the factors supporting another upgrade also include stronger investment, higher productivity and a better external position. Scope sees growth of 1.9% this year and 1.7% in 2027, helping debt fall to about 136% of GDP this year and toward 110% by 2031, aided by early repayments.

For investors, the distinction is important. Greece’s debt decline supports sovereign credit quality and keeps the story of fiscal repair intact, but the next leg of rerating depends on whether reform momentum can translate into stronger trend growth and a more resilient economy. If Athens delivers that, further upgrades could follow and borrowing costs should stay supported. If not, debt reduction may prove necessary but insufficient for a move deeper into the top investment-grade category.