ECONOMY

S&P downgrades Greece as talks fail to progress

Rating agency Standard and Poor’s downgraded Greece’s credit grade further into junk status on Wednesday, saying the country’s financial commitments would be unsustainable without “deep economic reform or further relief.”

The agency downgraded Greece to CCC+ from B-, with a negative outlook “given the risk of further worsening in liquidity for the sovereign, the banks, and the economy.”

Greece is in talks with its European creditor states to get the latest loan installment from its bailout program.

But the creditors want to see a list of economic reforms first.

The two sides are at loggerheads over what reforms are suitable.

Amid the uncertainty, investors are getting nervous and there are reports of savers withdrawing money from the banks.

S&P said Greece’s solvency hinges increasingly on business, financial and economic conditions.

“In our view, these conditions have worsened due to the uncertainty stemming from the prolonged negotiations between the almost three-month-old Greek government and its official creditors.”

Greece’s future is highly uncertain without more rescue loans.

It faces big debt repayments next month and a default could force it out of the euro.

Standard and Poor’s said the country’s “outlook for full-year economic growth is highly uncertain,” adding that it estimated the economy had contracted by nearly 1 percent during the past six months despite a weaker euro and lower oil prices.

[AP]