Ratings agency Fitch said today Ireland may lose its ‘AAA’ debt rating – the highest available – because of the rapid deterioration in the Exchequer finances.
Fitch said today the country’s debt rating had been placed on negative watch indicating that it is considering a downgrade.
Credit ratings are important because they determine how much interest the Government must pay on its borrowings.
“The rating action reflects recent disappointing news on Government revenue performance which points to very sharp declines in tax receipts across the board in January and February,” Fitch said.
“This will intensify the policy challenges facing the government as it seeks to tighten fiscal policy further than anticipated in the midst of a steep recession and raises the risk of fiscal slippage”.
Fitch said it would re-assess the medium term prospects for Ireland's public finances after the mini-budget due to be published by the Government in the first week of April.
If the Government took no action the fall in tax receipts over the first two months of the year would suggest a Government deficit of up to 12 per cent, the ratings agency said in a statement this afternoon.
The decision to reweight a country on negative watch is usually taken within six months.
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