Greece CCC rating heightens fear of default

By February 24, 2012

Greece (MNN) — Greece suffered another blow this week when Fitch Ratings downgraded their credit grade from "C" to the more deplorable "CCC."

On Tuesday, the eurozone approved Greece's 130 billion-euro bailout package to help stabilize the country's distressing economic state and keep it from bankruptcy. In response, Fitch downgraded Greece's credit rating, claiming a default by the nation "is highly likely in the near term."

Although Greece has argued that the downgrading is a technicality that will soon be reversed, Tasos Ioannidis with AMG International says the new rating is still unwelcome news.

"The most significant implication of this is that the market and the rating agency does not believe that the bailout package is adequate to ensure that Greece survives bankruptcy," Ioannidis explains. "This indicates that Fitch believes that Greece is more than likely to default. In fact, there was a confidential IMF report that was circulated earlier this week that indicates that Greece may need an additional 50 billion euros in capital in 2014."

Ioannidis adds, "Greece is in a very difficult position. There still remains a strong possibility of default for the country. Although, this package that the IMF and the European Union have is supposed to prevent it."

A default has deep implications for the nation's individuals, who continue to react in protest. Ioannidis says 72% of Greeks want to keep the euro, and the majority favored the recent bailout. Still, a default means more wage and job cuts–and this time in the public sector, not just the private sector.

The private sector has been losing jobs and wages for months. This has affected individuals, but also organizations, including AMG's evangelistically-minded St. Luke's hospital.

Most Greeks have public insurance, so hospitals in Greece are supposed to be reimbursed by the government for those insurance costs, says Ioannidis. But the government has been behind on their payments to St. Luke's for quite some time.

"Right now, they owe a significant amount of money to St. Luke's. If there were a default that means that at least part of what they owe would be at risk. It would likely not be paid, which means the hospital would have a much harder time in paying its own obligations to medical suppliers and others," explains Ioannidis.

"Financially, it would be a big hit for the ministry–particularly at a time when it's so much needed. We have so many people that come to us right now seeking help, and it's a great opportunity also to share the Gospel," says Ioannidis. "We are seeing more people respond to the Gospel message than any time in the recent past in Greece. This crisis has made them a lot more responsive."

Default would mean bad news for the country, but also for St. Luke's, and thus potentially the spread of the Gospel via the hospital. This one solution remains: pray.

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