Fitch Cuts Portugal Rating On Slow Deficit Reduction

[Joanne98]

Source: Dow Jones

Fitch Ratings cut its ratings on Portugal, citing a slower reduction in the current deficit and a "much more difficult financing environment" for the European nation's government and banks.

The ratings agency also expressed concern about a "deteriorating near-term economic outlook." Ratings agencies and investors have expressed concern about the economy's weak growth prospects as the government has so far made little progress in any growth-enhancing reforms to offset the fiscal drag from its austerity program.

Fitch cut its rating by one notch to A+, putting it four notches under the highest rating of AAA. The move came after peers Standard & Poor's Ratings Services and Moody's Investors Service within the past month warned they may trim the nation's ratings.

Portugal's fiscal consolidation program aims to reduce the budget deficit by 3% of gross domestic product by 2012 and to just 2% by 2013, and for government debt to peak at 86% of GDP in 2012. But Fitch, which has a negative outlook on the ratings, said additional measures may be needed to realize the government's deficit targets.



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