ECONOMY

Rating downgrade rings alarm bells for reforms

Greece’s sovereign credit rating downgrade by Standard & Poor’s (S&P) is a clear signal that the country needs to cut spending and focus on structural reforms to make public finances sustainable, the central bank governor said. «In the long run, fiscal reform will not be enough in itself,» Giorgos Provopoulos said in an interview in his Athens office Friday. «The longer-term performance of the Greek economy, and hence investor confidence in its bond markets, will depend on continued structural reforms.» Greece’s sovereign credit rating was lowered one step to A- by S&P last week, with the ratings agency citing the vulnerability of the country’s weakening finances amid global economic turbulence. The agency cited the «repeated» failure by the government of Prime Minister Costas Karamanlis to stick to budget plans to cut spending and reduce the deficit and debt. (Bloomberg)