S&P Cuts Slovenia's Ratings

New York, 14 January (STA) - Standard & Poor's (S&P) ratings

agency downgraded late on Friday Slovenia's long and short-term sovereign

credit ratings by one notch to A+/A-1 from AA-/A-1+ with a negative

outlook, mainly because of the deepening political and financial problems

of the eurozone, into which the country is closely integrated.

The ratings agency describes Slovenia as an open economy which is highly

susceptible to foreign movements, meaning that $negative growth

prospects for the country's trading partners could continue to affect

growth in Slovenia while the crisis in the eurozone

deepens$.

S&P moreover said that Slovenia's external

financing costs could remain high for an extended period of time, while the

relatively high rating remains supported $by our view of its open

economy, which has a relatively large export base that contributes to

economic growth$.

According to S&P, Slovenia also has

$a track record of fiscal prudence$ that has kept the debt levels

moderate despite the recent increases.

A better rating is however

constrained by the lack of structural reforms, which could result in

S&P lowering Slovenia's ratings again in 2012 or 2013.

$We

could lower the rating if we see that the new government does not present,

and begin to implement, a credible reform program, one that is likely to

include reforms in the labour market and pensions system, to ensure growth

that would maintain GDP per capita at the current level or higher,$

the agency said in a press release.

However, the firm could revise

the negative outlook to stable should the new government push through

structural reforms that S&P deems necessary for reducing $the

structural rigidities in the economy$.

S&P downgraded

Slovenia's ratings along with the ratings of eight other eurozone countries

- France, Slovakia, Austria, Malta, Spain, Cyprus, Italy and Portugal.