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It was not unexpected – late on Friday the Fitch ratings agency downgraded Slovenia’s long-term foreign currency rating to BBB + from A minus.
It also warned there could be more cuts in the future on worries over the state of the country’s shaky banking sector which might mean it is the next eurozone nation to have to ask for a bailout.
The Slovenian government is pressing ahead with an overhaul of the ailing banks in a bid to avoid that.
Standard & Poor’s rates the country A-minus with a stable outlook. Moody’s Investors Service has it at Ba1 with a negative outlook.
Fitch said the outlook remains negative due to the declining economic and fiscal outlook.
Slovenia’s gross domestic product (GDP) is expected to contract by two percent this year and 0.3 percent next year, which would make one of only two countries in the eurozone remain in recession in 2014, Fitch said.
The budget deficit (excluding the costs of recapitalisation of its banks) should be five percent of GDP this year. It was four percent last year.