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Moody's lowered Greece's credit rating again

23 April 2010 / 09:04:14  GRReporter
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Evaluation agency Moody's lowered the credit rating of Greece from A3 to A2, while leaving open the possibility for further reduction. Moody's report explained that the decrease is result of the assessment of the severity of risk, which carries the possible revaluation of foreign debt at higher than current levels. Financial analysts point out that the credit rating will not be able to remain A3, if the government of George Papandreou does not regain back the confidence of international markets. The report emphasizes that macroeconomic conditions in the country make the set objectives in the Stability and Development more difficult. 

Meanwhile, the Athens Stock Exchange suffered another record collapse and closed with 3.91 percent decline. Spread-index of the ten year Greek government bonds reached the dreaded 600 basis points, which means that the interest thereon is formed around 8.8 percent. CDS insurance pinned to 565 basis points, which is about 200 points higher than the CDS of Iraq. Experts commented that international markets reacted merciless to the news of revaluation of the value of the Greek government deficit. 

In early 2010 the government established the value of the public deficit to 12.7 percent. This value was enshrined as the basis for developing the program for stability and development, and for the correct implementation of the budgetary targets for this year. Rumors from few weeks ago for the reassessment of the deficit became reality and Eurostat announced that its real value is 13.6% and the external debt of Greece is converted to 115.1 percent of GDP. 

The Ministry of Finance announced that government objectives remain the reduction of government deficit with 4% and assured that they will not introduce new emergency economic measures by the end of the year. This, though, is not true for 2011 and 2012. In his report, Commissioner for Economic Affairs of the European Union, Olli Rehn said that Greece should immediately expedite the planned structural reforms and should consider a plan for additional economic measures in the next two years.

Tags: Greece economy GDP Moodys credit rating
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