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May 28, 2010 3:41 p.m. EST
Topics: government debt, macro economics, economy, business and finance, economy, United States
Mitchell Jaworski - AHN News Reporter
New York, NY, United States (AHN) - Fitch Ratings Service downgraded its credit rating on Spain from AAA to AA+ on Friday as the region’s fiscal crisis and the country’s goal to reduce debt levels will slow economic growth.
The move comes a month after Standard & Poor’s cut its rating on Spain to AA. Spain had held Fitch’s top credit rating since 2003.
Spain is currently battling the third largest budget deficit of the Euro nations. The country was especially hit hard when the bubble burst on its debt-driven construction boom.
In an effort to rein in the budget deficit, Prime Minister Jose Luis Rodriguez has frozen pensions and cut public wages. However, the move has not helped bring investment demand as borrowing costs have continued to rise for the country, a trend that became an issue for Greece just a month ago.
Spain is one of many Euro nations eligible for emergency lending facilities created by the European Union in its rescue package announced on May 10. The country can access up to 750 billion euros in loans.
In order to receive such loans Spain had to agree to steeper spending cuts, with a goal of cutting its deficit to 6 percent of gross domestic product by 2011.
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