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WRAPUP 1-Fitch cuts Croatia and Malta on budget worries
September 20, 2013 / 4:25 PM / 4 years ago

WRAPUP 1-Fitch cuts Croatia and Malta on budget worries

NEW YORK, Sept 20 (Reuters) - Fitch ratings cut the sovereign ratings on Friday of both Malta and Croatia, taking the latter to junk, on worries about both countries’ budgets.

The agency cut Croatia’s long-term foreign currency issuer default rating to BB-plus from BBB-minus. Fitch cut Malta to A from A-plus.

The outlook for both countries is stable.

In cutting Croatia to speculative grade, Fitch said the country’s fiscal outlook had deteriorated.

“The agency has revised up its forecast for this year’s general government deficit to 4.7 percent in 2013 from 3.9 percent, while general government debt/GDP is now expected to peak at 66 percent of GDP in 2016, up from our previous forecast of 62 percent,” the agency said in a statement.

Standard and Poor’s rates Croatia BB-plus with a negative outlook. Moody’s Investors Service rates the country Ba1 with a stable outlook.

Fitch’s downgrade of Malta also noted fiscal woes.

“Malta’s general government deficit was 3.3 percent of GDP in 2012, well above both the government’s target (2.2 percent) and Fitch’s September 2012 forecast (2.6 percent of GDP),” Fitch’s statement read.

“This slippage has carried over to 2013, when Fitch forecasts a deficit of 3.6 percent of GDP, compared with 2.7 percent in the original 2013 budget.”

Standard and Poor’s rates Malta BBB-plus with a stable outlook. Moody’s Investors Service rates the country A3 with a negative outlook. The country’s ratings from all three agencies are considered investment grade.

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