Moody’s Upgrades Greece’s Rating

A man approaches a poster that reads "1.5 million unemployed. What's to Blame" outside a government labor office in Kallithea, near central Athens, on Thursday, Nov. 14, 2013. Greece’s recession eased in the third-quarter of the year, while the unemployment rate stood at 27.3 percent in August, unchanged from the previous month. The government described the stabilization as the “first sign of recovery” for the crisis-hit country. (AP Photo/Petros Giannakouris)

ATHENS – Ratings agency Moody’s has upgraded Greece’s credit rating, citing improved results in the crisis-hit country’s economic adjustment program.

The agency announced the two-notch upgrade from C to Caa3 — still well below investment grade — in a move seen as a boost for the government that has promised to end a crippling recession and return to international markets next year.

The news was announced hours after the government on Nov. 29 said talks with bailout out creditors had hit snags, pushing back negotiations on cost-cutting reforms for at least a week.

Greece is on course to balance its budget before interest payment this year, meeting a central demand by rescue lenders who have kept the country afloat since it lost market access in 2010.

“Based on the government’s budget execution record up until October, Moody’s believes that the government’s deficit target is likely to be within reach,” the agency said.

A series of ratings agency downgrades marked the start of the Greek financial crisis, which ultimately led to the country’s 240 billion euro ($327 billion) bailout programs from the other eurozone countries and the International Monetary Fund. There was no immediate reaction to the news from the government.

Bailout loans came with demands for harsh austerity measures, which have seen the unemployment rate surge past 27 percent and is expected to wipe out a quarter of the country’s output before the recession ends.

Greece is currently in negotiations with bailout creditors to try and finalize a series of long-term cost-cutting reforms needed to secure future rescue loan payouts.

But EU-IMF inspectors postponed a trip to Athens next week, as government officials acknowledged key issues remained unresolved.

Finance Minister Yannis Stournaras said inspectors from the Troika of the European Union, European Central Bank and International Monetary Fund would likely travel to Greece the following week.

“We still have not reached an agreement today on several issues … The aim is to have this concluded by the end of the year,” he said.

Greece and rescue lenders remain at odds over austerity measures needed to cover a 2014 budget gap, and the course of various long-term reforms including mass public sector job cuts.

The government is also resisting Troika pressure to lift blanket protection measures for distressed home loans.

State hospitals, meanwhile, were operating with emergency staff  as doctors and staff held a 24-hour strike against planned health cuts under the country’s harsh austerity program.

Strikers held a protest outside the Health Ministry building in central Athens, and about 2,500 people marched peacefully to Parliament.