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Friday, June 5, 2020
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Fitch places Cyprus on rating watch negative

IN A MOVE that increases the probability that Cyprus may face a downgrade in the near-term, Fitch ratings agency placed six countries in the Eurozone (including Cyprus) on risk watch negative last Friday.

Fitch expects to complete the review by the end of January – and if that review concludes that a downgrade is warranted, it is likely be limited to one or two notches. Cyprus is currently at BBB, two notches above junk status.

Fitch also placed on rating watch negative Belgium (currently AA+), Spain (AA-), Slovenia (AA-), Italy (A+) and Ireland (BBB+).

In its statement Fitch said that the negative outlook was “prompted by the heightened risk of contingent liabilities to the French state arising from the worsening economic and financial situation across the Eurozone” and concluded that “a ‘comprehensive solution’ to the Eurozone crisis is technically and politically beyond reach”.

Government response

In response to the move by Fitch, the Finance Minister said that the government has taken all necessary and decisive measures for the fiscal consolidation of the economy and at the moment, there is no reason for concern.

These decisive measures are expected to help reduce sharply the budget deficit as a percentage of the GDP, overshooting the original objectives.

The statement pointed out that “Although the budget as submitted by the Government is the most tight budget over the past 35 years, the House adopted amendments to further cut costs, reducing the budget deficit for 2012 even more” and that financing needs for 2012 will be limited.

8 COMMENTS

  1. Andrew.

    The Credit Agencies didn’t miss the “thieving and worldwide corruption”. They’re PART of it.

    Many of those who are in senior positions at credit agencies/banks/accountants have at one time or another worked at Goldman Sachs (more commonly known in the business as Government Sachs) and other similar institutions. The technocrat Prime Ministers of Greece and Italy have at one time or other either worked at or been ‘consultants’ to GS. (The unelected Greek Prime Minister oversaw Greece’s entry into the eurozone. Need I say more?). These characters learned their trade at these august institutions and are part of a merry-go-round of people who’ve been ruling the financial roost for decades.

    Their whole raison d’etre is to amass huge fees from countries and corporations by giving them as clean a bill of health as possible (Enron is a classic case of a ‘respected’, worldwide firm of accountants getting it horribly wrong).

    I suspect that the credit agencies realize that the game’s up and they’re covering their backs.

  2. Totally confused as these guys ‘Fitch An co’ must be doing a great job, being so professional and all?? But where were they when all this kicked off in America, UK, Europe, et al the world, four and five five years ago?

    How come they missed all the thieves and world wide corruption at that time which lead us today??

  3. Perhaps there should be a CCC rating below ‘junk status’ for those countries whose credit worthiness reflects their ‘Consistently Corrupt Circumstances’.

  4. “The Finance Minister said that the government has taken all necessary and decisive measures for the fiscal consolidation of the economy and at the moment, there is no reason for concern.”

    I remember a government this year saying the same about a Nuclear power station “no reason for concern” ..it went in meltdown !!!

  5. If Fitch and Moody s ever take into account the fraud and corruption in the property market then it wont just be two notches it’s downgraded by.

    Meanwhile business as usual, lets bury our heads in the sand and it will all go away.

  6. Hm. I’m sure we believe the Cypriot Finance Minister’s pronouncements (“no reason for concern”) and projections just as much as the last incumbent of the post.

    I wonder if he’s taken into account the loss of tax revenue from the banks as a result of them posting huge losses, ditto private companies both big and small and the resulting loss of value added tax inflows.

    I forgot. There’s going to be a surge in transfer taxes as a result of the title deeds scenario being resolved. That should plug any potential shortfall…

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