Competent international credit rating agency Fitch lowered the credit rating of Greece from A to A-, reported international agencies. The decision was taken after the announcement of the new values of the budget deficit of the country, which for 2008 it came out to be 7.7% instead of the 5.7% announced by the previous government and for 2009 it is expected to reach 12.5%.
During the days after the elections on October 4 a true race happened in Greece of who is going to announce higher budget deficit. Finance minister Georgios Papakonstantinou was talking about 10% but the true hit under the belt was done by National Bank of Greece director Georgios Provopoulos, who mentioned the value of 12% and up. It remains a mystery for everyone how the budget deficit can become 12.5% from 5.7% in a matter of one week. From this guessing “party” the loser finally was Greece’s credit rating.
According to Fitch the national debt will reach 115% of the GDP for 2009—in other words higher than the average for the 90s. “With a deficit, which is not expected to fall under 9% till the end of 2010, the national debt is expected to calm down around 120% of GDP till the end of 2010 – the highest value for rating A,” says an official report by Fitch.
Representatives of the agency explain that during the last evaluation of the Greek economy in May 2009, a national debt of 108.4% was forecasted till the end of 2010. After this evaluation a chain of negative developments is expected for the Greek economy. More precisely, it is expected that the loan prices will increase drastically, because cutting credit ratings always leads to that.
Fitch announced the cut of Greece’s credit rating at a moment when the Ministry of Councils was in session, discussing the Greek economy and bills, which are to be introduced shortly. PM Georgios Papandreou asked his ministers not to hide any problems from him.
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