Breaking news - Fitch has downgraded Irelands Debt

silverharp

Only just heard it on CNBC , those rascals in London talking the economy down. Everyone looking for stimulus bear this in mind that additional debt taken on or refinanced by the state will start costing more. At some stage this could bleed over to the private sector and mortgage market.

silverharp

now CNBC are saying fitch didnt issue a statement , maybe false alarm , carry on with the reckless spending

segaBOY

silverharp wrote: »

now CNBC are saying fitch didnt issue a statement , maybe false alarm , carry on with the reckless spending

silverharp

might be true


Fitch Downgrades Ireland's Sovereign Rating to 'AA+'; Outlook Negative
08 Apr 2009 2:33 PM (EDT)



Fitch Ratings-London-08 April 2009: Fitch Ratings has today lowered the Republic of Ireland's Long-term foreign and local currency Issuer Default Rating (IDR) to 'AA+' from 'AAA'. The Short-term foreign currency IDR is affirmed at 'F1+' and the Country Ceiling is affirmed at 'AAA', the ceiling appropriate for euro area members. The Outlook on the Long-term IDR is revised to Negative. This action resolves the Rating Watch Negative assigned to Ireland's 'AAA' ratings on March 6, 2009.
The outlook for Ireland's public finances and fiscal risks is no longer consistent with an 'AAA' rating. The government's recently published budget projections show that, even ignoring the impact of the National Asset Management Agency initiative (NAMA), gross government debt will rise to around 80% of GDP by 2011, a more than three-fold increase from its pre-recession level of 25% at end-2007. This is a much faster increase than expected in any other 'AAA' rated sovereign.

A severe economic downturn - with GDP now expected to decline by 8% in 2009 as activity suffers from both the domestic property market correction and the international recession - has taken a heavy toll on public finances. The collapse in government revenues - which in 2009 are expected to fall by 16% following similar declines in 2008 - has also revealed structural weaknesses in the underlying budgetary position, previously disguised by property and asset market related revenue buoyancy.

The fiscal tightening measures taken by the government in the latest supplementary budget show considerable resolve and will contain slippage in the 2009 deficit relative to the previous 9.5% of GDP target to just over 1ppt. However, the need to engage in pro-cyclical fiscal tightening in the midst of the steepest recession in recent memory demonstrates the government's lack of policy flexibility.

The proposal to 'carve-out' property development and investment loans from banks' balance sheets is an innovative and bold measure to shore up confidence in the Irish banks. However, the up-front costs of this measure, to be funded directly on the government's balance sheet with government debt issued to the banks, will be very substantial. The face value of loans to be purchased is up to EUR90bn - equivalent to around 50% of 2008 GDP. Although these loans will be purchased at a discount from the banks, the associated crystallisation of losses for the banks is likely to entail a requirement for additional capital support from the government. While the government is acquiring assets, the return on these loans is uncertain.

With economic prospects remaining very weak and the fiscal deficit expected to remain very large in the near term, the Outlook is Negative.

Contact: Chris Pryce +44 (0) 20 7417 4342; Brian Coulton 44 (0)20 7682 7497; or Douglas Renwick 44 (0) 20 7417 4237, London.

Media Relations: Peter Fitzpatrick, London, Tel: + 44 (0)20 7417 4364, Email: peter.fitzpatrick@fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

RealityCheck

Hardly surprising in all fairness. It was inevitable since Standard and Poor did likewise. It will have minimal impact at this moment in time I think.

Liam Byrne

Well, since almost nobody LIVING here (with possibly the exception of bankers, speculators & developers that are delighted to be left off the hook by their former tent pals) has ANY confidence in this shower of chancers, is it REALLY any surprise that people abroad don't ?

jimmmy

silverharp wrote: »

Only just heard it on CNBC , those rascals in London talking the economy down. Everyone looking for stimulus bear this in mind that additional debt taken on or refinanced by the state will start costing more. At some stage this could bleed over to the private sector and mortgage market.

Hardly surprising. As an economist commentator on the radio said, as deflation is now forecast to be 4% this year ( ie minus 4% inflation ), the govt. missed the golden opportunity to slash public sector expenditure by 4%
It means the public sector get another 4% raise in real terms.

silverharp

jimmmy wrote: »

Hardly surprising. As an economist commentator on the radio said, as deflation is now forecast to be 4% this year ( ie minus 4% inflation ), the govt. missed the golden opportunity to slash public sector expenditure by 4%
It means the public sector get another 4% raise in real terms.

Thats my worry , I can control my own spending , but when I have to deal with this drunken uncle of a state that I dont quite trust with my kids, I am afraid. They are understating the projected slowdown for window dressing purposes , this means they arent cutting back enough , its a mathamatical certainty that the country will bleed interest payments in the future due to failure to deal with reality today

Zynks

I am starting to suspect the Brians do actually have a plan.... It's OK people. The gas and oil off our coast will pay for all of that :rolleyes:

segaBOY

Zynks wrote: »

I am starting to suspect the Brians do actually have a plan.... It's OK people. The gas and oil off our coast will pay for all of that :rolleyes:

Shell to sea etc.