The pressure on Greece’s new government to reach a deal with bailout creditors ratcheted up Friday as Standard & Poor’s cut its credit rating on Greece further into junk status and warned of the country’s possible exit from the 19-nation eurozone.
The ratings agency lowered Greece’s long-term rating by one notch to “B-’’ and warned about its weak cash position. But the Greek government, barely two weeks in power, is insisting it will not give up on demands to overhaul the country’s bailout agreements and bring an end to years of austerity.
Prime minister Alexis Tsipras met Friday with the government’s top finance officials, who said the new Greek administration would not renege on its election pledge to renegotiate the bailout deal.
“It is clear that the government will remain committed to the clear mandate it has received from voters and will not accept an extension of the dead-end and catastrophic bailout,’’ a senior Greek official said. The official asked not to be named as talks with European officials are ongoing.
Still, since the left-wing Syriza party swept to power in the January 25 election, it has made little progress in getting Greece’s bailout creditors to agree to change course. finance minister Yanis Varoufakis undertook a whistle-stop tour of European capitals in an attempt to overhaul the bailout’s terms and conditions but nothing concrete has yet emerged.
In return for rescue cash from its partners in the eurozone and the International Monetary Fund, successive Greek governments have had to impose a raft of spending cuts and tax increases that have stifled the country’s economy.
Although the Greek economy has emerged from a brutal six-year recession, the country remains burdened by its debts, which stand at over 170 per cent of Greece’s annual GDP.