Al-Jazeerah: Cross-Cultural Understanding

www.ccun.org
www.aljazeerah.info

News, February 2012

 

Al-Jazeerah History

Archives 

Mission & Name  

Conflict Terminology  

Editorials

Gaza Holocaust  

Gulf War  

Isdood 

Islam  

News  

News Photos  

Opinion Editorials

US Foreign Policy (Dr. El-Najjar's Articles)  

www.aljazeerah.info

 

 

 

Editorial Note: The following news reports are summaries from original sources. They may also include corrections of Arabic names and political terminology. Comments are in parentheses.

 
Moody's slashes ratings for six eurozone nations

 

Moody's slashed the debt ratings of Italy, Spain and Portugal as well as Slovenia, Slovakia and Malta on Monday. France, Britain and Austria were warned that they were at increasing risk of downgrades due to the eurozone debt crisis.

By News Wires (text)

AFP - Moody's on Monday chopped the debt ratings of Italy, Spain and Portugal and put France, Britain and Austria on warning, saying they were increasingly vulnerable to the eurozone crisis.

Casting doubt over whether Europe's leaders were doing enough to reverse the downslide of the region's economy and financial sector, Moody's also cut its ratings for Slovenia, Slovakia and Malta.

The ratings agency cited the region's weak economic prospects as threatening "the implementation of domestic austerity programs and the structural reforms that are needed to promote competitiveness."

Market confidence "is likely to remain fragile, with a high potential for further shocks to funding conditions for stressed sovereigns and banks," it said.

Moody's also questioned whether Europe was pulling together adequate resources to deal with the crisis.

"To a varying degree, these factors are constraining the creditworthiness of all European sovereigns and exacerbating the susceptibility of a number of sovereigns to particular financial and macroeconomic exposures," it noted.

Austria, France and Britain all retained the top AAA rating but were put on negative outlooks, a warning that if conditions worsen they could be hit with full downgrades.

Italy was cut one notch to A3 from A2; Spain two notches to A3 from A1, and Portugal one step to Ba3 from Ba2.

Slovakia and Slovenia both went down one step to A2, while Malta moved one step to A3.

The downgrades came a day after Greece and Europe appeared to pass a major hurdle when the Greek parliament agreed to a tough austerity package despite rioting in the streets of Athens and other cities.

That appeared to open the way for a comprehensive debt restructuring and second massive bailout of the country, avoiding a default that could have sparked more turmoil in the eurozone.

"The negative outlooks reflect the presence of a number of specific credit pressures that would exacerbate the susceptibility of these sovereigns' balance sheets, and of their ongoing austerity programs, to any further deterioration in European economic conditions and financial landscape," it said.

Moody's said it had limited the magnitude of the rating cuts due to the "European authorities' commitment to preserving the monetary union and implementing whatever reforms are needed to restore market confidence."

It cited the agreement by EU leaders on a framework for disciplined fiscal planning as well as the measures already adopted to lower the risk of contagion in the region emanating from the most troubled countries.

In putting France on warning – the country's top rating has already been cut by Standard & Poor's – Moody's said Paris's debt situation was deteriorating, and was "now among the weakest of France's Aaa-rated peers."

It pointed to "significant risks to the French government's ability to achieve its fiscal consolidation targets, which could be further complicated by a need to support other European sovereigns or its own banking system."

French Finance Minister Francois Baroin "took note" of Moody's decision, saying in a statement that Paris was "determined to pursue measures that boost growth, competitiveness... jobs and public deficit reduction."

As for Britain, Moody's said there was "increased uncertainty" over the pace of the government's efforts to cut its fiscal deficit due to slower growth prospects.

"Any further abrupt economic or fiscal deterioration would put into question the government's ability to place the debt burden on a downward trajectory by fiscal year 2015-16."

In London, British Finance Minister George Osborne said Moody's negative outlook was a "reality check" for anyone who thought the country, which is in its second year of an austerity drive, could duck tackling its fiscal deficit.

"This is proof that, in the current global situation, Britain cannot waiver from dealing with its debts," Osborne added.

Italy was downgraded due to similar reasons, that weak economic growth could prevent it from hitting targets for closing its budget gap and slashing debt.

Spain, it said, faced the problem that the country's regional governments were not closing their local spending gaps fast enough.

"Moody's is skeptical that the new government will be able to achieve the targeted reduction in the general government budget deficit, leading to a further increase in the rapidly rising public debt ratio."








Fair Use Notice

This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.

 

 

 

Opinions expressed in various sections are the sole responsibility of their authors and they may not represent Al-Jazeerah & ccun.org.

editor@aljazeerah.info & editor@ccun.org