By Ria Novosti
Moody’s Investors Service said on Friday it has downgraded Belgium’s local- and foreign-currency government bond ratings by two notches to Aa3 from Aa1 with a negative outlook.
The international ratings agency said the downgrade was prompted by “heightened risks posed by the sustained deterioration in funding conditions for euro area countries with relatively high levels of public debt, like Belgium” and “increasing medium-term risks to economic growth” for the Belgian economy.
“The further weakening economic growth outlook also complicates the government’s ability to achieve its medium-term fiscal consolidation plans and may necessitate additional fiscal measures beyond the roughly 11 to 16 EUR billion yearly planned for the coming three years,” the agency said.
“This could further weigh on economic growth,” it said.
Moody’s also said the situation was affected by political bargaining and “new risks and uncertainties for the Belgian government’s balance sheet stemming from the banking sector.”
Friday’s rating action concludes Moody’s review for downgrade of Belgium’s sovereign debt ratings, initiated on October 7.
Earlier on Friday, Fitch Ratings placed Belgium’s sovereign rating into Rating Watch Negative (RWN). The downgrade may occur by late January 2012.
Standard & Poor’s placed Belgium’s sovereign credit ratings on CreditWatch with negative implications on December 5.