Thursday, April 16, 2015
Greece's credit rating is downgraded once again
Greece's credit rating was downgraded by the ratings agency, Standard and Poor because of Greece's debt and other financial commitments are unsustainable. The rating was dropped from a B-/B to a CCC+/C. The ratings agency said the Greek economy has shrunk by 1% in six months and without deep economic reform, the debts will become unsustainable for Greece. The finances within the government have improved but was overall dented by weaker economic activity. There also new fears in regards to its debt because the borrowing costs rose by 3.5%. The new Syriza government started negotiating with IMF, the European Commission, and the European Central Bank in order to reduce the burden of debt repayments. The next debt repayment is scheduled for May 12 and is supposed to be about $800 million dollars. If Greece and its creditors do not reach a new deal, the economic conditions will worsen in the country. Is there a possibility of Greece and its creditors reaching a new agreement? Will the Eurozone, especially Germany, even be willing to make such deal?
http://www.bbc.com/news/business-32326547
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3 comments:
Greece most likely won't be able to make end meets, but Germany probably would still try to reach new agreement. Greece being in the EU in many ways help Germany as well as letting it fails will create many unprecendented consequences that the strongest economy in EU would not desire. They might still appear to be strict with Greece in term of austerity, but they definitely won't let Greece collapse.
I agree with what Duc said. Because Greece is a part of the EU, they would not want one country to fail, therefore they will probably try to help Greece become stronger economically. I thought it was interesting to see that the finances within the government have improved, but it would be hard to maintain this growth due to the high borrowing costs.
All of this is true, but if the Greek government continues to behave in the manner it has (i.e. not at all conciliatory), they might be removed from the EMU, which would be catastrophic for their state economy.
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