Fitch keeps rating with ‘stable’ outlook, as budget aims to close gap
Fitch maintained Greece’s ‘B’ junk rating and stable outlook on Friday, citing the “remarkable budgetary adjustment” by Athens in recent years. It projected a primary budget surplus of 1.5% of GDP this year, without ruling out a slight over-performance.
The rating agency said it expects the current loan review to be concluded by the end if the year, but sees some risk that it may slip into early 2015, with investors already punishing Greek bonds over the stalemate on finding a common candidate for the election of a new president, albeit for a ceremonial position.
“Medium-term financing remains predicated on government staying on track with its official creditors,” Fitch said.
The government, meanwhile, pushed ahead with plans for a near-balanced budget next year, ignoring objections from the Troika of international lenders who say Athens is set to miss its deficit forecast.
The government stuck to its forecast in an updated 2015 budget plan that was submitted to parliament on Friday without the approval of the lenders, marking its first near-balanced budget in more than three decades.
“We are fighting for it,” Finance Minister Gikas Hardouvelis told reporters. “There is some convergence, but they are pushing us on the budget.”
After nearly five years on aid that has come at the price of painful cutbacks, Greece has made progress in getting its finances in order and its economy has begun to expand again. The budget reiterated the economy would grow 0.6% this year and 2.9% in 2015.
It also predicted the budget deficit for this year would be larger than previously estimated, standing at 1.3% from 0.8% forecast in the October draft budget.
Athens also lowered its target for a primary surplus this year to 1.8% from 2% previously and slightly raised the target for next year to 3% from 2.9%.