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.