Brussels, 30/03/2011 (Agence Europe) - On Wednesday 30 March, the European Commission criticised the latest downgrading of Greece's debt by rating agency Standard & Poor's (from BB+ to BB-) because of fears about a potential restructuring of the debt. EU Economic and Monetary Affairs Commissioner Olli Rehn said that the Commission did not share Standard and Poor's' assessment. He said that the Commission's comments were clear and transparent and shared by the International Monetary Fund and the European Central Bank, namely that Greece is in the process of applying across the board all the elements of its economic adjustment programme and there was no reason to believe that the situation could get out of hand. He mentioned the solid nature of the public deficit figures issued by the Greek statistics office, which have been validated by Eurostat, the EU's statistics office.
Recognising that the international ratings agency had a huge and sometimes determinant influence on behaviour on the money markets, a spokesperson for Olli Rehn pointed out that progress has been made in regulating credit rating agencies registered in the European Union. An EU regulation passed at the end of last year gives ESMA (the European Supervision of the Securities and Markets Authority) the power to supervise rating agencies. Rehn and Internal Market Commissioner Michel Barnier explained that work is ongoing at the Commission and crucial new legislation would be unveiled after the summer break to reform the oligopolistic nature of financial ratings. The commissioners were commenting on the downgrading of Greece by Moody's ahead of the recent eurozone summit (see EUROPE 10334).
The Greek finance minister described as “unbalanced and unfair” the analysis of the agency Standard & Poor's on the results of the European Council, the implementation by Athens of the economic adjustment programme and the prospects for the Greek economy. He argued that the ratings agency is overlooking the fact that the austerity plan anticipates Greece's return to the financial markets from 2012 and that the country now enjoys better loan conditions (reimbursement time extended to 7 years and reduction of fixed interest rate by 1%). He went on to state that the commitment of the Greek government to carry out a vast 50 billion privatisation programme, proceeds from which will go to pay back public debt, has also been ignored, as well as May's presentation of a budgetary plan aiming to bring the national public deficit down to 1% of national GDP by 2015. Greek public debt is currently around 150% of GDP. For the second time in a week, the agency Standard & Poor's also downgraded Portugal's rating. (M.B./transl.fl)