Fitch cuts Italy credit rating after election impasse
Baku, March 11 (AZERTAC). Ratings agency Fitch added to Italy`s mounting problems on Friday by cutting its credit rating due to the political uncertainty after last week`s election, deep recession and rising debt.
Fitch lowered Italy`s sovereign rating by one notch to BBB-plus, with a negative outlook, raising the risk its next ratings change will be a further downgrade.
"The inconclusive results of the Italian parliamentary elections on February 24-25 make it unlikely that a stable new government can be formed in the next few weeks," Fitch said.
"The increased political uncertainty and non-conducive backdrop for further structural reform measures constitute a further adverse shock to the real economy amidst the deep recession."
The election produced a hung parliament, with a center-left coalition winning the lower house but falling short of control of the Senate, which has equal legislative powers.
Responding to the downgrade, the Italian Treasury said the current political uncertainty was a normal part of democracy.
"We reaffirm the confidence that Italy will find the political solutions and will therefore continue the ongoing reform process," it said in a statement.
Fitch said it now expects the economy to shrink by 1.8 percent this year, far below the most recent forecast by Mario Monti`s outgoing technocrat government of a 0.2 percent contraction.
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