Last week, Fitch downgraded Greece’s foreign and local currency ratings from A to A- due to a ballooning deficit that has spiraled out of control.
Now, Moody’s is also considering a cut for Greece. It’s an understandable move, considering that Greece’s increasing deficit is already 12.5% of its GDP.
Moody’s: “The deterioration of the fiscal position raises serious questions about the sustainability of Greek public finances and the problem will be compounded by a less favourable global economic environment going forward,” says Arnaud Marès, a Senior Vice President in Moody’s Sovereign Risk Group.
“The new Greek government, which came to power on 4 October, has unveiled revised deficit figures for 2008 and 2009 showing a sharp deterioration of public finances relative to the previously reported estimates. Although the recession is less severe in Greece than in many other developed economies, the projected deficit for 2009 has been revised upwards, potentially to as high as 12.5%. This is more than twice the level of the previous forecast and substantially higher than the Eurozone average. The magnitude of the revision perpetuates Moody’s longstanding concerns about the transparency and reliability of official statistics in Greece,” says Mr. Marès.