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Greek Outlook 'Negative' As S&P Downgrade

(c) Sky News 2012

A leading credit rating agency has downgraded Greece giving the debt-ridden country a "negative" outlook.

Changing the status from "stable", Standard & Poor's (S&P) said the economy in the crisis hit nation was worsening and it was likely to need yet more funding.

S&P also stated political challenges could soon force another downgrade.

"The negative outlook reflects the potential for a downgrade if shortfalls in Greece's 2012 deficit and arrears targets established under the current EU/International Monetary Fund program are not met by new funding or other relief," S&P said in a statement.

It added: "We see the likelihood of shortfalls, owing to election-related delays in the implementation of budgetary consolidation measures for the current year, as well as the worsening trajectory of the Greek economy."

The cut in Greece's already junk-level rating comes following comments from eurogroup president Jean-Claude Juncker that a Greek exit from the eurozone would be "manageable".

The country has promised to adopt austerity measures worth 11.5bn euro (£9.12bn) in order to continue on an international bailout program that will give Greece a 130bn euro (£103bn) lifeline, keeping it from going bankrupt.

Troika meetings finished in Athens on Sunday after which the International Monetary Fund, the European Commission and the European Central Bank said progress had been made with the new coalition government.

:: S&P said it sees the Greek economy shrinking by 10% to 11% during 2012-2013.

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