Greece Downgraded Over High Debt
December 9th, 2009Via: Financial Times:
Greece saw its credit ratings downgraded to the lowest level in the eurozone on Tuesday as fears mounted over its deteriorating public finances.
Heavy selling of Greek stocks and bonds came amid fears that the country was heading for financial disaster unless politicians tackled dangerously high debt levels. Shares on the Athens stock exchange fell more than 6 per cent.
Fitch cut ratings on Greek debt to BBB plus with a negative outlook. It is the first time in 10 years a leading ratings agency has given Greece a rating of below A grade.
George Papaconstantinou, Greek finance minister, said the country would do “whatever is required” to reduce a record budget deficit and achieve its medium-term fiscal targets.
He said the downgrade reflected Greece’s “mounting credibility gap in recent years and an exceptionally difficult fiscal situation” faced by the new Socialist government, which took over in October.
Fitch said the downgrade “reflects concerns over the medium-term outlook for public finances, given the weak credibility of fiscal institutions and the policy framework in Greece, exacerbated by uncertainty over the prospects for a balanced and sustained economic recovery”.
Moody’s and Standard & Poor’s, the other main ratings agencies, have also warned Greece it could be downgraded owing to its debt, which is forecast to rise to 125 per cent of gross domestic product next year.
