Moody’s: it will be tough for most EU indebted countries to borrow again

[Anna Sergijenko, MCIoJ, Financial News Contributor]

The Daily Telegraph: It seems that even when the EU and IMP bailouts are finally repaid by the EU states (which is in the ‘never’ category according to analysts) which had to take them up, or face bankruptcy which in turn would have destroyed the Eurozone, the bailout countries may find it impossible to borrow ever again.

The reason for that is because the international community has lost faith in the ability of the European countries, in particular the PIGS bloc countries (Portugal, Ireland, Greece, Spain) governments, to manage without additional bailouts for those who have got them already and new ones for those who will certainly apply for them (eg., Spain).

For example, although Greece was bailed out for EUR 110bn last year already, its Prime Minister, Mr. Papandreou, still has no sound economy stimulation plans at hand, although in accordance with the terms of the bailout Greece must raise EUR 50bn by 2015 instead of piling on new debts.   Although he said that the government plans to sell its shares in public companies, including the main telecommunications operator OTE and utility company PPC, no specific time frames were mentioned and therefore the government’s plans are still unclear.

While Greece will have to scramble for money for some time, Ireland’s prospects are not a lot better. That is because, according to EU ‘stress tests’, Ireland’s draconian cuts in public spending are making the country’s coffers bare which will mean that  the European Central Bank will be sure to raise its interest rates  sometime soon.  As a result of all that, Moody’s has now lowered country’s credit rating to just above ‘junk’ as having ‘weaker economic growth prospects’ and ‘uncertainty’ , and ‘should the intended fiscal consolidation goals not be met, a further rating downgrade would likely follow’.
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Interesting  times are ahead of the eurozone countries, it seems.
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