The medium-term prospects for Greece led Fitch Ratings to downgrade that country’s long-term foreign currency and local currency Issuer Default Ratings (IDR), on December 8. Greece was also given a “Negative” prognosis.
Greece’s IDR had been A-; it is now rated BBB+. Greece’s short-term foreign currency IDR was downgraded as well, from F1 to F2, but Fitch added that the “Country Ceiling” for Greece remains at AAA, “in line with the common country ceiling for euro area sovereigns,” according to the Fitch Ratings release.
Fitch cited “concerns over the medium-term outlook for public finances given the weak credibility of fiscal institutions.” Fitch noted several problem areas for the country, including a “large current account deficit,” growth of government debt to, “close to 130% of GDP,” and high expenses related to a population which is growing older and will be funded by a “a highly generous and unreformed pension system.”