Moody's Downgrades Greece, Euro Slides

Finance | April 23, 2010, Friday // 11:20|  views

Striking demonstrators rally in central Athens on 22 April 2010. A nationwide strike paralysed Greece as public sector employees embarked on a 24-hour walkout to protest against the austerity measures imposed by the Greek government. Photo by EPA/BGNES

Moody's Investors Service has lowered Greece's sovereign ratings to A3 from A2 and placed them on review for further possible downgrade.

The move is based on Moody's view that there is a significant risk that debt may only stabilize at a higher and more costly level than previously estimated, the ratings agency said.

The review, which is expected to conclude within the next three months, will determine whether the ratings will remain in the A range and their likely outlook.

"Although the Greek government appears to be on, or even ahead of, schedule in terms of the implementation of the actions laid out in its Stability and Growth Program, the difficult macroeconomic and financial environment has made continued adherence to the program considerably more challenging," says Sarah Carlson, vice president and senior analyst in the sovereign risk group and lead analyst for Greece.

Moody’s altered Greece's rating after it was confirmed that the government ran up a budget deficit of EUR 32.34 B in 2009, representing 13.6% of gross domestic product (GDP) far worse than expected.

The euro continued to slide towards a one-year low overnight as the downgrade in Greece’s credit rating weighed heavily on financial markets.

The single currency fell to USD 1.3201 in Tokyo trade, its lowest since April 30, 2009, and reached 86.26p against sterling. It slid against 14 out its 16 major currencies.

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Tags: greece, Moody's, economic growth, Simeon Djankov, Boyko Borisov, EC, European Commission, finance minister, Convergence Program, Eurozone, ERM II, budget deficit, recession, GDP

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