Rating action

Scope Ratings GmbH (Scope) has today affirmed the Hellenic Republic’s (Greece) long-term issuer and senior unsecured debt ratings at BBB, in both local and foreign currency, and revised the Outlooks to Positive, from Stable. Scope has also affirmed Greece’s short-term issuer ratings at S-2 in both local and foreign currency, with Stable Outlooks.

The revision of the Outlook reflects:

1. Improved resilience to external shocks. Greece’s economy has shown steady growth and resilience to shocks in recent years, expanding by about 2% in 2025 and outperforming most euro area peers. Robust domestic demand, strong tourism, and EU-funded investment under the NGEU programme continue to underpin growth, while reforms in the public administration, taxation, and the labour market support competitiveness. The banking sector has strengthened further, reinforcing financial stability.
    
2. Strong debt dynamics supported by prudent fiscal management. Greece’s public finances continue to outperform budgetary targets, with a general government surplus of around 0.6% of GDP and a primary surplus near 3.6% projected for 2025. The debt-to-GDP ratio is set to decline from around 145% in 2025 to 122% in 2030, supported by conservative budgeting, strong revenue performance, and moderate nominal growth. The government maintains a substantial cash buffer of around EUR 42bn (about 17% of GDP) and benefits from a long maturity, low-cost debt structure.

Going forward, Scope will monitor continued adherence to fiscal prudence, progress on structural reforms to support investment and productivity, ongoing efforts to reduce external imbalances, as well as the sustained improvement in the banking sector’s performance, as these will be key to sustaining Greece’s positive rating momentum.

Rating challenges include: i) a very high public debt stock, which remains a long-term vulnerability despite its declining trajectory; ii) structural constraints on medium-term economic growth, such as limited economic diversification and adverse demographic trends; and iii) external imbalances, given persistent current-account deficits and a negative net international investment position, and residual financial sector challenges, reflecting the strong sovereign–bank nexus and large stock of non-performing exposures managed by servicers.

For the updated rating report, click here.

Key rating drivers

Improved resilience to external shocks, supported by steadier growth, ongoing reform momentum and strengthening financial resilience. Greece’s economy demonstrates steady and resilient growth dynamics within the euro area context. It weathered the Ukraine war and energy-price shocks better than most European peers, thanks to limited reliance on Russian gas, rapid diversification of energy supplies, and robust service exports, notably tourism. Following solid growth of about 2.3% in 2024, the economy expanded by 2.0% year-on-year in the first half of 2025, with full-year growth projected at around 2.2%, supported by robust domestic demand, investment and strong service-sector activity that offset a weaker external environment. The unemployment rate continued its downward trend, averaging 9.5% in the first half of 2025, down from 11.0% a year earlier. Scope projects the Greek economy to maintain robust growth momentum in 2026, with real GDP expected to expand by around 2.0%. Growth will be driven by strong investment and continued labour-market expansion, as well as income-support and tax-reduction measures introduced in 2026.

EU funding under the NGEU programme continues to drive investment. Ongoing reforms in digitalisation, tax administration, and labour-market flexibility have strengthened Greece’s capacity to absorb shocks and sustain growth. Continued progress in public administration and adherence to EU fiscal frameworks underpins Greece’s medium-term reform commitment. Further reforms to stimulate private investment, upgrade infrastructure, and address skills and demographic challenges remain essential to raising potential growth, currently estimated at around 1.25%.

Scope expects the Greek economy to continue operating with a positive output gap after the post-pandemic recovery, supported by NGEU-related investment. The inflation adjustment has stalled in 2025, with headline inflation averaging around 3.0% by September (vs 2.1% in the euro area) and core inflation at 3.6%, driven by strong services demand, higher wages, and rising rents. Nonetheless, HICP inflation eased to 1.8% in September 2025, signalling gradual disinflation.

Investment activity in Greece has continued to strengthen, providing important support to the country’s medium-term growth outlook. Gross fixed capital formation has increased by around 60% since 2019, raising the investment-to-GDP ratio to about 15.5% in 2024, the highest in over a decade. This reflects domestic reforms improving the business climate and strong EU RRF inflows, with EUR 8.6bn of EUR 18.2bn in grants already absorbed. Investment is increasingly focused on digital infrastructure and renewable energy, enhancing productivity and competitiveness. Scope expects total investment to reach about 18% of GDP by 2027, still below the euro area average.

The markedly improved banking sector further reinforces Greece’s macroeconomic resilience. Credit growth has resumed, driven by NGEU-related lending and SME financing, with corporate loans up 15.9% in Q2 2025. Non-performing exposures have fallen below 5%, with the NPL ratio at 3.6% in June 2025, close to the euro-area average of 2.2%, reflecting sustained deleveraging and better loan performance. Capital and liquidity remain strong, with a CET1 ratio of 15.8%, total capital ratio of 20.4%, and ample buffers (LCR 212%, NSFR 136%). Profitability has normalised, with an ROE of 13% and after-tax profits of EUR 2.5bn in H1 2025.

While credit servicers still manage around EUR 94bn of private debt (about 44% of GDP), mostly non-performing, this overhang continues to weigh on households and firms but no longer poses systemic banking risks. The Bank of Greece’s proactive macroprudential policy, including a higher Countercyclical Capital Buffer of 0.5% (effective October 2026) and borrower-based measures introduced in January 2025, further support financial stability. Residual vulnerabilities, such as the sovereign-bank nexus and the still-high share of deferred-tax credits (around 45% of CET1), are declining. Overall, the sector’s robust capitalisation, profitability, and liquidity, together with declining legacy risks, underline the improvement in financial resilience and its growing contribution to Greece’s medium-term growth.

Strong debt dynamics supported by prudent fiscal management; favourable debt profile and improving funding flexibility. Greece’s public finances continue to outperform budgetary targets, with the general government balance projected to post a surplus of around 0.6% of GDP in 2025 and a primary surplus of 3.6% of GDP, reflecting strong revenue performance and conservative budgeting. Revenue performance has been strengthened by the lasting impact of tax-evasion reforms, including digital payments reducing the shadow economy, and stronger underlying economic activity.

For 2026, Scope projects a headline deficit of 0.1% of GDP, slightly below the budget target of a 0.1% surplus. Greece’s long-term fiscal trajectory demonstrates an improvement in debt sustainability, supported by sustained primary surpluses and continued structural reforms. Scope expects the public-debt-to-GDP ratio to decline from 145% in 2025 to around 122% in 2030, down sharply from about 206% at the height of the pandemic in 2020, reflecting consistent primary surpluses of around 2.9% of GDP on average over 2025-30 and high nominal growth.

The medium-term fiscal framework is built on conservative macro-economic and revenue assumptions and contained expenditure growth, creating room for revenue outperformance if growth remains resilient. Scope expects Greece’s fiscal approach to remain prudent supported by structural improvements and NGEU investment, rather than temporary cyclical effects. Moreover, the NGEU programme anchors fiscal policy in multi-year, growth-oriented investment plans, fostering a more stable, rules-based environment that supports debt sustainability.

A large cash buffer of around EUR 42bn (about 17% of GDP) provides ample liquidity coverage for several years of debt service, reinforcing the sovereign’s fiscal and financial resilience. Greece’s high share of long-term, low-interest debt, predominantly held by official-sector creditors, together with its significant cash buffer, supports the government’s debt-servicing capacity and mitigates the impact from potential market volatility and interest rate shocks. Scope expects interest costs to remain relatively stable around 3% of GDP in coming years. Market sentiment has strengthened, as reflected in sovereign spreads that remain near historical lows, supported by sustained primary surpluses and strong liquidity buffers. Finally, Scope expects the government to accelerate GLF repayments ahead of schedule, reflecting its commitment to prudent and proactive debt management, supporting the public debt trajectory.

Rating challenges:

First, despite the sharp decline in public debt from its 2020 peak of around 206% of GDP, Greece’s debt burden remains the highest in the euro area, at 145% of GDP in 2025. This high level of indebtedness continues to limit fiscal space. However, the favourable debt structure, with long maturities, predominantly fixed rates, and low refinancing needs, supports debt sustainability. Scope expects the debt ratio to gradually decline through 2030, underpinned by sustained primary surpluses and moderate nominal growth.

Second, Greece continues to face structural constraints on medium-term growth, such as a narrow economic base with a high reliance on services such as tourism and shipping. Labour-market participation, particularly among women and older workers, remains below EU averages, while an ageing population, declining birth rates, and the outflow of skilled young professionals constrain potential growth. These structural weaknesses underline the importance of maintaining reform momentum under the Recovery and Resilience Plan, focusing on digitalisation, innovation, and public-sector efficiency to sustain competitiveness and investment.

Finally, external vulnerabilities and remaining financial-sector challenges continue to constrain Greece’s long-term macro-economic sustainability. The current-account deficit widened to 7.1% of GDP in 2024 from 6.8% in 2023, reflecting weak euro-area demand and higher import volumes linked to rising investment activity. While improved since the energy shock of 2022, the current account is set to remain in deficit, largely due to the country’s continued dependence on energy imports. In addition, Greece’s negative net international investment position reflects persistent reliance on foreign capital inflows to finance this deficit. Progress in the energy transition, which would reduce dependence on imported energy, could gradually strengthen Greece’s external position, though this improvement is expected to take time to materialise.

Rating-change drivers

The Positive Outlook reflects Scope’s view that the risks to the ratings over the next 12 to 18 months are tilted to the upside.

Upside scenarios for the ratings and Outlooks are (individually or collectively):

1. A sustained and material reduction in the public-debt ratio, supported by continued primary surpluses and prudent fiscal management; and/or
    
2. Improved medium-term growth prospects and stronger external resilience, reflected in sustained reform implementation, higher investment, a lasting improvement in the current-account balance, or continued strengthening of the banking sector and financial stability framework.

Downside scenarios for the ratings and Outlooks are (individually or collectively):

1. A stalling or reversal in the decline of the public-debt ratio, due to weaker fiscal discipline or adverse growth dynamics; and/or
    
2. A weakening of macro-economic resilience, reflected in a significant deterioration of external balances or a renewed increase in banking-sector risks.

Sovereign Quantitative Model (SQM) and Qualitative Scorecard (QS)

Scope’s SQM, which assesses core sovereign credit fundamentals, signals a first indicative credit rating of ‘bbb-’ for Greece, which was approved by the rating committee. Under Scope’s methodology, the indicative rating receives 1) a one-notch positive adjustment from the methodological reserve-currency adjustment; and 2) no negative adjustment from the methodological political-risk quantitative adjustment. On this basis, a final SQM quantitative rating of ‘bbb’ is reviewed by the Qualitative Scorecard (QS) and can be changed by up to three notches depending on the size of Greece’s qualitative credit strengths or weaknesses compared against a peer group of sovereign states.

Scope identified the following QS relative credit strengths for Greece: i) fiscal policy framework; ii) debt profile and market access; iii) external debt structure; iv) financial sector oversight and governance; and v) governance factors. Conversely, Scope identified the following QS relative credit weaknesses for Greece: i) growth potential and outlook; ii) macro-economic stability and sustainability; iii) current account resilience; iv) environmental factors; and v) social factors.

On aggregate, the QS generates no adjustment for Greece’s credit ratings, resulting in final BBB long-term ratings. A rating committee has discussed and confirmed these results.

Environment, social and governance (ESG) factors

Scope explicitly factors in ESG issues in its ratings process vis-à-vis the sovereign-rating methodology’s stand-alone ESG sovereign-risk pillar, which holds a significant 25% weighting under the quantitative model (SQM) and 20% weight under the methodology’s qualitative overlay (QS).

For environmental factors, Greece scores below the euro area average, reflecting its high exposure to climate-related natural disasters, including wildfires, heatwaves, droughts and floods, which pose increasing risks to infrastructure, tourism, and agriculture. Greece remains highly dependent on imported fossil fuels, particularly natural gas and oil, despite recent progress in expanding renewable capacity. Greece has adopted ambitious decarbonisation objectives under the National Energy and Climate Plan (NECP) and the updated 2030 targets, including reducing greenhouse gas emissions by 55% relative to 1990 levels and increasing the share of renewables in final energy consumption to above 45% by 2030. Achieving these goals will require significant investment in energy infrastructure and storage, consistent implementation of the RePowerEU strategy, and further progress on the energy transition.

For social factors, Greece faces long-standing demographic and labour market challenges. The old-age dependency ratio, projected to exceed 58% by 2050, is among the highest in the EU, weighing on potential growth and pension-system sustainability. Labour force participation, although improving, remains below the euro area average, particularly for women and younger workers. Income inequality has narrowed somewhat in recent years but remains elevated by EU standards, while the risk-of-poverty rate is high, particularly among youth and the unemployed. Skill mismatches continue to constrain productivity and social inclusion. Scope therefore assesses the social pillar as a relative weakness, despite gradual improvements supported by reforms under the Recovery and Resilience Facility (RRF) aimed at enhancing labour participation, upskilling, and social protection coverage.

For governance factors, Scope uses a composite index of the World Bank Worldwide Governance Indicators (WGI). According to this index, Greece scores above its peers, reflecting institutional strengthening and policy credibility in recent years. Greece benefits from strong EU and euro area institutional anchoring, which underpins policy predictability, legal stability, and adherence to fiscal and monetary frameworks. The country has maintained effective reform implementation and continuity, supported by a stable parliamentary majority and consistent alignment with EU governance and policy objectives. Institutional capacity has been enhanced through reforms in public administration, tax collection, and the judiciary, as well as progress in digitalisation and public-sector efficiency. This reform momentum has reinforced Greece’s macroeconomic stability. Scope therefore assesses governance as a relative strength compared with peers, underpinned by a more stable political environment and prudent macroeconomic management.

Rating committee
The main points discussed by the rating committee were: i) domestic economic risk; ii) public finance risk; iii) external economic risk; iv) financial stability risk; v) ESG-related risk; and vi) rating peers.

Methodology
The methodology used for these Credit Ratings and Outlooks, (Sovereign Rating Methodology, 27 January 2025), is available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The model used for these Credit Ratings and Outlooks is [Sovereign Quantitative Model Version (ex CVS Model) 4.1], available in Scope Ratings’ list of models, published under scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): registers.esma.europa.eu/cerep-publication. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Rated Entity and/or its Related Third Parties participated in the Credit Rating process.
The following substantially material sources of information were used to prepare the Credit Ratings: public domain and the Rated Entity.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and/or Outlooks and the principal grounds on which the Credit Ratings and/or Outlooks are based. Following that review, the Credit Ratings and/or Outlooks were not amended before being issued.

Regulatory disclosures
These Credit Ratings and Outlooks are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and Outlooks are UK-endorsed.
Lead analyst: Jakob Suwalski, Executive Director
Person responsible for approval of the Credit Ratings: Alvise Lennkh-Yunus, Managing Director
The Credit Ratings and Outlooks were first released by Scope Ratings in January 2003. The Credit Ratings and Outlooks were last updated on 6 December 2024.

Potential conflicts
See scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use/exclusion of liability
© 2025 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Fund Analysis GmbH, Scope Innovation Lab GmbH and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5, D-10785 Berlin. Public Ratings are generally accessible to the public. Subscription Ratings and Private Ratings are confidential and may not be shared with any unauthorised third party.