International ratings agency Fitch downgraded Slovenia on Friday by one notch, with a negative outlook, citing a deterioration of the government's finances and its worrying economic situation. Fitch said Slovenia's main debt rating had been cut to 'BBB+' from A- after the county's "macroeconomic and fiscal outlook has deteriorated significantly since Fitch's last rating review of the Slovenian sovereign in August 2012."
The rating's agency said: "The agency now forecasts a 2.0 percent contraction in real GDP in 2013 and a decline of 0.3 percent in 2014, when Slovenia is expected to be one of only two eurozone economies to contract." Slovenia has been widely tipped as the next eurozone member to require a bailout from the European Union and International Monetary Fund, and the ratings downgrade could substantially raise the cost of borrowing for Ljubljana.
The European Commission in Brussels warned this week that Slovenia may not have done enough to escape becoming the eurozone's sixth bailout case. The former Yugoslav state's government agreed, at the end of last week, to a series of privatisation's, tax increases and austerity measures. The scheme aims to contribute one billion euros ($1.3 billion) per year to the recession-battered country's public finances. On April 30, Moody's downgraded Slovenia by two notches to junk status, with a negative outlook.
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