Greece gets credit rating boost

  • 22/07/2015
Greek Prime Minister Alexis Tsipras (Reuters)
Greek Prime Minister Alexis Tsipras (Reuters)

Debt-ridden Greece has received a welcome boost with Standard & Poor's lifting its credit rating by two notches.

It comes as the Greek government pushes to see a final deal on its international bailout locked in by August 20.

More draft legislation was presented to parliament on Tuesday(local time) with politicians due to vote on a second batch of reforms on Wednesday.

It will be a fresh test of Prime Minister Alexis Tsipras' authority, after he suffered a major rebellion in his radical-left party Syriza during a vote on a first tranche of bailout measures last week.

After parliament has voted on the second bill - which must pass if Greece is to receive the bailout worth up to 86 billion euros over three years - the government "will immediately resume negotiations with the (lender) institutions, EU, ECB and IMF, which should take until August 20 at the latest," government spokeswoman Olga Gerovassili said on Tuesday.

August 20 is the deadline for debt-crippled Greece to pay 3.2 billion euros owed to the European Central Bank, ahead of a payment of 1.5 billion euros owed to the International Monetary Fund in September.

The Greek economy received a boost on Tuesday when Standard & Poor's on Tuesday raised its credit rating by two notches to CCC+ from CCC-, still in junk territory but a step in the right direction.

S&P said that the scenario of Athens defaulting on its debts was no longer inevitable in the coming year and thus the chances of Greece having to pull out of the euro were reduced, though still "high".

Athens was able to pay off billions in debt to the ECB and IMF on Monday with 7.16 billion euros of emergency "bridge" funding granted by the EU.

Tsipras managed to push the first series of unpopular reforms through parliament last Wednesday - including sweeping changes to Greece's taxes, pensions and labour rules - but only with the help of pro-European opposition parties.

Within Syriza, 32 of the party's 149 MPs voted against the measures, including former finance minister Yanis Varoufakis among them. A further six abstained.

The second bill includes an EU directive, adopted after the financial crisis in Cyprus in 2013, that guarantees bank deposits up to 100,000 euros, as well as civil justice reforms designed to speed up legal proceedings and reduce their costs.

Civil servants' union ADEDY said it would stage a protest against the bill on Wednesday evening during the emergency debate in parliament.

Athens agreed last week to carry out tough reforms in exchange for a massive third bailout aimed at keeping Greece from crashing out of the eurozone.