Standard and Poor downgrades Greek credit rating

On Tuesday rating agency Standard and Poor revised Greece's credit outlook to negative. The agency said that the debt-ridden country might need even more aid from creditors. The Troika(IMF, European Commission and European Central Bank) has demanded that the country meet its obligations to impose austerity policies before it can receive more money. However, given the economic and political situation this may be impossible.

In a statement S and P said:. "We are revising the outlook on the long-term ratings on Greece to negative, reflecting the possibility of a downgrade if Greece fails to secure the next disbursement of the EU/IMF Program," Greece has made budget cuts but members of the Troika will be returning in September and will decide then if conditions for further aid have been met. After their visit the inspectors said:. "We see the likelihood of shortfalls, owing to election-related delays in the implementation of budgetary consolidation measures for the current year, as well as the worsening trajectory of the Greek economy," The coalition government that won the recent election has been asking for changes and more time to meet the conditions set earlier for aid.

S and P said that the Greek economy will shrink10 to 11 percent over the 2012-13 period even after a recession that has lasted years. Greek credit is at CCC a speculative rate already. Fitch rating agency gives Greece the same grade. This is eight levels below investment grade. GDP has shrunk for five years now.Unemployment has risen to 22.5 per cent and is much higher than that among young people. However, the Troika wants Greece to cut even more state jobs to help balance the budget. Creating even more unemployment and fewer jobs is hardly a recipe for generating more revenue that could be used to pay down debt. Just to tide it through this year Greece may need up to 8.7 billion U.S. For more see this article.