Moody’s not sure Greece can fund itself after bailout

Moody’s rating agency has said it is doubtful that Greece can finance itself without any assistance after its Troika bailout ends later this year.

“We know that the discussion about the day after the bailout in Greece is politically loaded,” Moody’s senior Vice President Marie Diron said in an interview with financial Imerisia on Saturday.

“We are not sure that the economy’s credibility has been restored enough so that the country can stand on its own feet,” she added.

Moody’s upgraded Greece’s sovereign rating to Caa1 in August and is due to review its rating at the end of November. Greece has made a turnaround by getting its finances back on track and ending a four-year exile from debt markets in April. But the country should stick to reforms, and growth needs to pick up so that its debt load becomes sustainable, Diron added.

Following an unpopular 240 bln euro bailout that led to tough austerity measures and rising unemployment, Athens continues to rely on EU/IMF loans. But under pressure ahead of a presidential vote in February that could trigger snap polls, the government has staked its survival on exiting the bailout ahead of plan at the end of this year.

National debt is seen reaching 175% of GDP this year and the government has lobbied to secure lower interest rates and longer maturities from creditors, even though yields on bonds have been rising instead of dropping.

The country emerged from a crippling six-year recession at the start of the year and has been growing ever since, seasonally adjusted data on Friday showed.

Figures showed three consecutive quarters of growth, even though Greece had only been expected to exit what the government has called the “Great Depression” in the third quarter. Earlier quarters were revised using new EU formulas. The news is a boost for the fragile coalition government, which has been promising austerity-weary Greeks better times ahead. Analysts said it meant the country will probably top its 2014 0.6% growth target and improve its swollen debt ratios.

“The figures will certainly help to beat the fiscal and debt targets for this year, although they don’t significantly change the picture for long term debt sustainability,” said Diego Iscaro of IHS Global Insight.

Eurobank economist Platon Monokroussos said the latest data combined with the revisions would lower Greece’s debt to GDP ratio - expected to hit 175% of GDP this year - but only by one percentage point.

Data published on a seasonally adjusted basis for the first time since 2011 showed the 182-bln euro economy expanded by 0.8% in the first quarter - the first time since the second quarter of 2009.

It then grew 0.3% in the second quarter and 0.7% in the third on the back of a strong tourist season, faster than eurozone drivers Germany and France.

But economists estimate that even if the economy continues to grow as forecast over the next two years, it would only return to about 80% of its pre-crisis size in 2007 when it sank into recession amid a global credit crunch and a heady bout of overspending and borrowing. Since then, the economy has contracted for 24 out of the 26 quarters until the end of last year.

A debt crisis and austerity imposed by EU/IMF lenders deepened the recession, wiping out a quarter of the economy, cutting household income by 30%, leaving over one in four Greeks unemployed and triggering violent protests, analysts have said.