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Dec 30, 2014 10:39 AM

Greece warned political turmoil may hurt credit rating

The Associated Press

ATHENS, Greece (AP) Credit rating agency Fitch said Tuesday that prolonged political uncertainty in Greece could hurt its sovereign rating, while the country's deputy prime minister claimed a stalemate could leave Greeks with "no economy."

The warnings came a day after a snap general election was called for Jan. 25 and despite an easing of initial market turmoil.

Fitch said it was unclear whether any single party would be able to form a government alone, a stalemate that would "increase the risks to Greece's creditworthiness." It also cited risks of further delays to bailout negotiations and a potential drop in bank deposits.

"Following the elections ... political and policy uncertainty will probably remain high for some months," Fitch said.

The agency currently lists Greece under a B rating, which is still below investment grade, following a slow climb back from the brink of default.

On Tuesday, conservative Prime Minister Antonis Samaras formally requested that Parliament be dissolved following the failure by lawmakers to elect Greece's new president after three rounds of voting.

"Greece's position in Europe is at stake. This is a struggle of the highest responsibility, for the future of our children," Samaras said after making the request.

An opinion poll published late Monday gave the anti-bailout Syriza party a three-point lead over Samaras' New Democracy party indicating that neither leading party could govern without forming a coalition.

Samaras' Socialist coalition partner, Deputy Prime Minister Evangelos Venizelos, said a repeat of successive general elections that occurred in 2012 would cause a full return to crisis.

"We don't have the luxury of a second general election," he said. "We must have a government on Jan. 26. Otherwise, there'll be no economy, no country."

Syriza has described the government remarks as alarmist.

"The government fell because of its failed policies and under the weight of a social outcry" against growing poverty and unemployment, a party statement said.

Shares on the Athens Stock Exchange were down less that 0.5 percent lower in late trading, broadly in line with other European markets.



Fitch Press release: http://goo.gl/GH7dcx


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