Fitch Ratings downgraded Greece’s credit rating yesterday for the second time in 50 days, upsetting the local stock and bond markets and requiring the finance minister’s intervention to allay the growing fears. Fitch announced yesterday afternoon that it had reduced the country’s rating from A- to BBB+. This reflects «concerns over the outlook for public finances given the weak credibility of fiscal institutions and the policy framework in Greece, exacerbated by uncertainty over the prospects for a balanced and sustained economic recovery,» said Fitch’s statement. It is the first time in the last 10 years that Greece has fallen below the A rating and the country is the sole eurozone member to do so. Fitch said it recognized that the target to contain the deficit to just over 9 percent of gross domestic product next year is «achievable» and acknowledged Athens’s efforts to improve fiscal transparency. However, in a blow to the two-month-old government, the ratings agency suggested that the debt will soar to 130 percent of GDP and stated that it is not convinced the proposed pension reforms, cuts in spending and broadening of the tax base would reduce the debt. Worse still, Fitch argued that Greece’s outlook is negative, which sent a message that the country could suffer a further downgrade unless the above essential measures are taken. Estimates now suggest that other major ratings agencies, such as Moody’s and Standard & Poor’s, may well follow suit by February. The spread between the Greek 10-year bond and the German Bund soared to 230 points on the Fitch announcement, while the Greek bourse recorded a 6 percent decline. Fitch immediately proceeded with a downgrade of the country’s major banks – National Bank, EFG Eurobank, Alpha Bank, Piraeus Bank and ATEbank – stressing the state’s limited ability to support the banks. Finance Minister Giorgos Papaconstantinou sought to play down fears, saying, «We will do what is required to be consistent with the need for a medium-term reduction of the budget deficit.» He added that «we have committed ourselves to tabling a supplementary budget in 2010, if needed.» He also dubbed unrealistic the scenario of Greece resorting to the assistance of the International Monetary Fund. Finance Ministry officials expressed surprise yesterday at Fitch’s move, arguing that they had been in contact with the agency and stating there had not been any deterioration in the situation since October 22, when the previous downgrade took place. Bank of Greece Governor Giorgos Provopoulos said worries about the impact on banks were «excessive» and explained that «they are focused on the negative fiscal position the country is in. Already some specific action is unfolding to handle this difficult situation,» he said, predicting there would be no repercussions on bank profits.