S&P says could downgrade Belgium within 6 months

BRUSSELS Tue Dec 14, 2010 6:42am EST

BRUSSELS Dec 14 (Reuters) - Standard & Poor's rating agency said on Tuesday Belgium's sovereign debt could be downgraded within six months if its inability to form a new government persists and its debt trajectory worsens.

"We could lower the sovereign rating on Belgium one notch if we conclude that the lack of consensus will result in the government not being able to stabilise its debt trajectory to move towards reforms," the ratings agency said in a statement.

"If Belgium fails to form a government soon, a downgrade could occur, potentially within six months."

The agency added that it had concerns about Belgium's general fiscal outlook, and specifically its target of reducing its budget deficit to 4.1 percent of GDP next year.

The statement followed a downgrading of Belgium's outlook to 'negative', while its rating of AA+/A-1+ was maintained.

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