August 10, 2018 / 9:30 PM / 8 months ago

UPDATE 1-Fitch upgrades Greece rating to 'BB-' from 'B'

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Aug 10 (Reuters) - Global rating agency Fitch Ratings upgraded the long-term foreign currency issuer default rating on Greece to ‘BB-‘ from ‘B’.

The outlook on Greece is stable, Fitch said on Friday.

Greece’s banking sector is getting better, Fitch noted, adding that the country’s relationship with its European creditors has “substantially improved”.

The rating agency said it expects the economy to grow two percent in 2018 and 2.3 percent in 2019 for Greece.

The rating agency said the completion of the final review of Greece’s European Stability Mechanism (ESM) program creates a path for the country’s exit from the program later in August.

In June, euro zone finance ministers extended maturities and deferred interest of a major part of their loans to Greece along with a big cash injection to ensure Athens can stand on its own after it exits its bailout on Aug 20.

Greece has been living primarily on money borrowed from euro zone governments in three bailouts since 2010, when it lost market access because of a ballooning budget deficit, huge public debt and an inefficient economy and welfare system.

While Fitch noted that the recent deal to end a decades-long name dispute between Greece and Macedonia poses a risk of near-term snap elections to the country’s ruling left-right coalition, the rating agency also assessed that early elections would not disrupt fiscal and economic returns from the ESM program.

Greece and its neighbour had long been at odds over the latter’s name, as Greece’s northern region is also called Macedonia. The Macedonia issue is sensitive in Greece, where political stability is pivotal as the country emerges from a huge debt crisis.

Fitch and S&P Global Ratings had also raised Greece’s sovereign credit rating to ‘B’ earlier in the year. (Reporting by Kanishka Singh in Bengaluru Editing by Alison Williams and Diane Craft)

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