(Greece) – According to Moody’s Corporation, a credit reporting and financial analysis company based in the United States, the economic conditions have stabilized after Greece secured funds from its third bailout. In a report that Moody’s Investor Service published on Monday, Greece has a stable outlook on their Caa3 rating.
However, they also mentioned in their report that there are associated risks attached to implementing the third bailout. They have said that, “given the government’s slim majority in parliament and the weak track record and capacity of the public administration to execute legislated reforms.”
Moody’s also believes that the economy will contract by 0.7% of the Gross Domestic Product (GDP) this year. They also believe that after that, the Greek economy will return to a state of growth in 2017 at 1.8%. However, whether this happens will depend on a variety of factors, including whether or not the Greek government will clear its arrears to the private sector, which as of April of 2016, total 5.5 billion euros.
Moody’s also said, “The outcome of the election in September 2015 and the successful conclusion of the first review of Greece’s third bailout program in June 2016 mean that the risk of scenarios involving either an impasse with official creditors and/or a deeper recession resulting from prolonged uncertainty has diminished somewhat.” The agency also predicts that the country’s government debt ratio will reach a reach of 182.8% of the GDP. They said that, “While the level is high, the structure of Greek public debt and debt-servicing requirements remain benign.”
Greece recently secured funds from its third bailout since 2010, which it needs to pay off loan balances to the European Central Bank and International Monetary Fund. The international creditors have said that the Greek government needs to find a way to decrease government spending and increase revenue. The austerity measures, tax hikes, and privatization of public services such as the regional airports have all come about because of the bailout.