This rating action follows Moody's decision to change the outlook on the rating of Government of Greece to positive from stable on 17 March 2023.
Moody's decision to change the City of Athens' rating outlook to positive from stable reflects its close operational and financial linkages with the central government as well as the expectation of continued strong intrinsic strengths of Athens' financials going forward.
Moody's expects that Athens will also benefit from reduced systemic risk, as captured by the change in outlook on Greece's rating of Ba3 to positive from stable.
Should they materialize, Athens will benefit from the improved credit conditions of the sovereign given the city's key role as capital city and as an economic and financial hub. With 40% of the city's operating revenues comprised of taxes and tariffs sensitive to local economic dynamic, the country's moderate GDP growth in the following two years will support Athens' revenue collection.
In addition, Moody's believes that ongoing improvements in the sovereign fiscal position, institutional quality and level of supervision of regional and local governments, if they continue, will translate into greater predictability of government transfers, which account for around 26% of the city's operating revenue. Next Generation EU funds will also support the local economy.
