Greece hits out after new downgrade
Published 07/03/2011 | 10:50
The Greek government today launched a scathing attack against credit ratings agencies after the troubled country's debt was downgraded further below junk status.
Moody's lowered its credit rating for Greece by three notches to B1 from Ba1 and warned it may cut again if the government's commitment to its austerity programme wanes or international benefactors become less willing to support it.
The Greek government immediately hit back and said the move was "completely unjustified" and did not reflect an "objective and balanced" assessment of the conditions Greece is presently facing.
Greece was saved from bankruptcy last May after accepting a €110bn bailout from the EU and the International Monetary Fund (IMF).
A statement from the Greek Ministry of Finance said: "Ultimately, Moody's downgrading of Greece's debt reveals more about the misaligned incentives and the lack of accountability of credit rating agencies than the genuine state or prospects of the Greek economy.
"Having completely missed the build-up of risk that led to the global financial crisis in 2008, the rating agencies are now competing with each other to be the first to identify risks that will lead to the next crisis.
"At a time when the global economy is fragile and market sentiment is sensitive, unbalanced and unjustified rating decisions such as Moody's today can initiate damaging self-fulfilling prophecies and certainly strengthen the arguments for tighter regulation of the rating agencies themselves."
In issuing its downgrade, Moody's warned the Greek government's economic programme may not lead to the intended drop in debt and return to growth expected.
The eurozone has come under increasing scrutiny since Greece took the EU bailout. Ireland followed suit in November and was forced to accept a €85bn bailout.
Portugal, Spain and Italy have been tipped by many as the next potential casualties in line for financial aid.
Moody's main rivals, Standard & Poor's and Fitch Ratings, rate Greece's slightly higher at BB+ though S&P has recently warned that it may lower its view.
Fitch affirmed Spain's credit rating of AA+ on Friday but downgraded its outlook from stable to negative.