it made sense to her standard and poor overall ratings, not proceed in the middle of the election season in the update of the value of our country to the coveted investment grade. Yes, in the April assessment you changed the so-called “outlook” from stable to positive, however she remained cautious due to the high probability that we will go to second elections and find ourselves in a period of intense political processes and unstable situations. And as we know, markets hate volatility.
S&P, choose the safe path to postpone the update due to special circumstances, avoiding the risk of the update and its eventual folding, immediately after the elections, in the event of an unfortunate result that would change the economic policy followed.
The truth is that rating agencies are currently more concerned, due to the possibility of political uncertainty until the formation of a government, which in turn will give its own imprint, which for the formation of a diverse government. In its forecast, S&P assumes that the next government will continue to pursue structural reforms, but it is not yet known how quickly the new government will form and implement its own economic program.
At the same time, he is concerned about the possibility of prolonged political uncertainty, which would freeze the binding movements to be followed in the real economy and would delay disbursements as well as the use of the Recovery Fund resources. As S&P Global Ratings pointed out in its report, the pace and depth of the reforms will ultimately depend on the determination of the next government to be formed after the elections.
However, there are also analysts, like yours. General Societywho believe that the May elections are one of the risks that could complicate things and that in the worst possible scenario the new government coalition What will result from the elections? could reverse the reformswhich are necessary for the economic and fiscal improvement of Greece.
And while S&P’s politically balanced estimates hit the nail on the head, estimates from other, less politically neutral analysts ring alarm bells. national entrepreneurship presents an inertia given the possibility that the improvement of the credit quality of the national economy and the recovery of the investment grade do not advance on time. If we exclude the Governor of the Bank of Greece and the managers of the four systemic banks, the silence from the rest of the business community is deafening.
As if the update did not concern them. As if they did not benefit from the effects of the update.
The benefits investment grade payback is multiple. In addition to the estimated drop in Greek bond yields, the prestige of the Greek economy is strengthening as it marks the end of a difficult period for the country amid three memorandums and a 4-year enhanced supervision regime.
He greek bonds, they will move from being classified as high-risk “junk” securities to an “investment” category, in which case their returns will fall further. The cost of indebtedness of the Greek state will decrease and the same will happen with the expenses of the state budget, but also with the tax revenues. At the same time, the country’s bankruptcy risk is reduced, thus facilitating the attraction of even more foreign investment.
An important element is also the fact that recovery from investment grade will also lead to improve the solvency of banks, that it will now be able to borrow at lower interest rates from the interbank market, as well as from the ECB, guaranteed by government bonds that will be valued at their real value.
What does this mean; How lending to banks will be cheaper, with the result that this lower cost will affect the cost of borrowing for businesses and households. Therefore, both businesses and households will spend a smaller part of their budget to repay their loans.
Through this prism, we would therefore expect that the representatives of the business sectors have already intervened in this regard and have held the parties accountable. And to have asked them to programmatically commit to the return to investment grade and to have asked them to avoid cries of populism that belittle not only the upgrade itself, but also the evaluation process by foreign houses.
Is it possible that they don’t mind the lower cost of money? Is it possible that they are not interested in the entry of new foreign investors into the national business? Is it possible that they do not care about the smooth and rapid use of the resources of the Recovery Fund?
of course you toothere are economic interests that invest more in political instability and in the formation of a multiparty and irregular government scheme, rather than in the formation of an autonomous government. In a model of government dependencies, more than in a strong government model. In a government of correlations, more than in a solid government with a certain orientation.
Because such a government will certainly be powerless and vulnerable to pressure. So economic interests who prefer Sunday’s polls to show a multi-group, multi-party government without a specific political agenda and structured economic program, are willing to sacrifice the success of the investment-grade recovery on the altar of potential control. of the government of temporary alliances.
They are weighing on one side of the balance the lower cost of borrowing and the flexibility of the financial costs of their businesses and on the other the control of a spineless government from which they can claim their own benefits, among which will be the review of investments of the Recovery Fund promised by Syriza.
for the majority elections are an encounter with tomorrow. For some, the elections are an attempt to return to the disastrous dreams of the past. And for some others, they mark an opportunity for a major shakeup and reshuffling of the deck on different terms and rules, through political pressures and shaky balances.