S&P Slashes Belgium's Credit Rating

Finance | November 25, 2011, Friday // 20:01|  views

Prime Minsiter of Belgium Yves Leterme waves upon his arrival in Brussels, Belgium 26 October 2011. EPA/BGNES

Standard and Poor's has downgraded Belgium's credit rating from AA+ to AA over concerns about the Belgian world-record political impasse, debt level and slowing growth.

Belgium's caretaker Prime Minister, Yves Leterme, said, as cited by SkyNews, that the downgrade was "bad news".

He urged bickering political parties to reach a deal on a 2012 budget over weekend in order to finally pave the way for the formation of a coalition government.

Ratings agencies have long warned Belgium that the political impasse, which has lasted a world-record 19 months, could impact the credit score of a country whose debt is nearly as big as its annual national output.

"The ability of authorities to respond to potential economic pressures from inside and outside of Belgium... in our opinion is constrained by the repeated failure of attempts to form a new government," S&P said in a statement.

After Greece, Portugal and Ireland received bailouts in the last year, and with Italy and Spain now in the firing line, the downgrade is more bad news for euro zone leaders scrambling to contain the relentless debt crisis, SkyNews points out.

The news about Belgium's credit rating downgrade by S&P came as Socialist leader Elio Di Rupo, the French-speaking politician favored to become the next prime minister, led a new round of talks among six Flemish and Francophone parties struggling to reach a budget deal.

Belgium has been left with just a caretaker government for more than 500 days as its politicial parties bicker over the forming a workable coalition.

Speaking on RTL television, Leterme called for a coalition deal before the weekend ends.

"It is blindingly obvious, we have to send a very clear signal... preferably before the markets open (on Monday)," he said.

His finance minister, Didier Reynders, blamed the downgrade on a "global loss of confidence" in euro zone public finances and insisted that Belgium's creditworthiness remains "one of the strongest in Europe".

The European Commission on Wednesday repeated a warning to Belgium to bring its public deficit below 3.0% of GDP by 2012 - rather than the 4.6% forecast failing action -- or face a fine running over half a billion euros.

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Tags: Yves Leterme, Standard & Poor's, Standard & Poor's, Standard and Poor's, credit rating, credit ratings, Flemish, Francophone, Elio Di Rupo, Didier Reynders, caretaker government, euro zone, Eurozone, debt crisis, debt crises


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