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GreekReporter.comGreek NewsEconomyMoody's slashes Greek rating, may cut further

Moody's slashes Greek rating, may cut further

Moody’s Investors Service on Monday slashed its Greek credit ratings by three notches from Ba1 to B1 and warned that they could be downgraded further given the risks to the country’s stabilisation efforts.
Moody’s said the downgrade reflected its concerns over Greek efforts to balance its strained public finances after Athens had to seek a bailout from the European Union and International Monetary Fund last year to avoid default.
“The fiscal consolidation measures and structural reforms that are needed to stabilise the country’s debt metrics remain very ambitious and are subject to significant implementation risks, despite the progress that has been made to date,” Moody’s, one of the top three ratings agencies, said in a statement.
Greece “continues to face considerable difficulties with revenue collection,” it said.
Additionally, there “is a risk that conditions attached to continuing support from official sources after 2013 will reflect solvency criteria that the country may not satisfy, and result in a restructuring of existing debt.”
There has been increasing speculation that Greece and other under-pressure eurozone states such as Ireland and Portugal might need to restructure their debt at some point if they are ever to get their heads above water again.
The possibility, however, is a hugely sensitive issue because of the wider implications for the whole eurozone and its creditworthiness which its stronger member states such as Germany prize above all else.
Eurozone leaders meet later this week in Brussels to discuss plans for a permanent European Stability Mechanism to replace the 3-year European Financial Stability Fund which was set up after Greece nearly defaulted in May.
On Monday, Moody’s said it had also put Greece’s B1 rating on Negative outlook because “the country’s very large debt burden and the significant implementation risks in its structural reform package both skew risks to the downside.”
The cost of insuring Greek debt against default rose to a record. Greece’s finance ministry on Monday termed the most recent downgrading of the country’s economy by Moody’s as “completely unjustified”, in a relevant announcement made hours after the development.
According to the ministry, the decision is not based on an “objective and balanced evaluation of the economic conditions being faced by Greece.”

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