Moody's downgrades Greek Cyprus by 2 notches

Moody's said the destruction of the Vasilikos power plant as a result of a July 11 blast at a nearby naval base has amplified concerns about the fiscal situation in the south.

Moody's downgrades Greek Cyprus by 2 notches

International credit rating agency Moody's downgraded Greek Cyprus' credit rating by two notches over concerns about the economic toll of a deadly blast that took out the south of the divided island's main power station.

As well as cutting its rating on Greek Cyprus from A2 to Baa1, the agency also slapped a negative outlook on the country Wednesday, meaning that another downgrade may be in the offing.

Moody's said the destruction of the Vasilikos power plant as a result of a July 11 blast at a nearby naval base has amplified concerns about the fiscal situation in the south, which began using the euro as its currency in 2008.

As well as killing 13 people, the blast has led to rolling, two-hour power cuts to cope with demand.

Moody's has also reduced its growth forecasts for Greek Cyprus to zero percent and one percent in 2011 and 2012, respectively. Before the blast, the European Commission projected Greek Cyprus' economy to grow by 1.5 percent this year and 2.4 percent in 2012.

The New York City-based rating agency also said that an "increasingly fractious political climate" in the wake of the blast raises the risk that planned economic reforms may be watered down or delayed.

Public anger at the Greek Cypriot leadership over the blast of dozens of seized containers filled with Iranian munitions has yet to subside. Thousands continue to protest on the streets, calling on their leader Dimitris Christofias to quit.

Cihan news agency

Last Mod: 27 Temmuz 2011, 17:51
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