The election of Alexis Tsipras as Prime Minister is considered a “credit negative” development from credit rating agency Moody’s, which claims that the SYRIZA-led government will suffer from liquidity and funding problems.
The credit rating agency doubts whether the new government will be unable to come to an agreement with the troika in order to secure an extension of its present bailout program, which in turn will increase the risk and deter investors, thus affecting the country’s growth prospects.
Moody’s claims that SYRIZA is against the structural reforms which the troika has demanded to continue providing support, while expressing its skepticism about the request for a new debt write off. The possibility of a “Grexit”, despite being refuted by European officials, has also affected the consumer and investor trust, with Moody’s noting that the outflow of capital from Greek banks is indicative of the situation.
Moody’s estimates that 7-8 billion euros have left the country since the end of November, when bank deposits in Greece amounted to about 164.3 billion euros. This 5% reduction is manageable, however Moody’s predicts a further exacerbation of the problem, unless Greece’s creditors are satisfied with the new government’s financial planning.
