September 05, 2012 00:00 By The Nation, DPA 2,768 Viewed
Moody's Investors Service's decision on the European Union's debt rating is not unexpected, said Bank of Thailand Governor Prasarn Trairatvorakul.
He said yesterday that the BOT has anticipated this credit outlook downgrade, as the debt problem in the Euro area will remain chronic with a series of short-term solutions.
The downgrade indicates that the euro crisis tends to worsen, he said.
Prasarn also insisted that the Thai economy remains solid despite the euro crisis, with strong domestic consumption and private investment. Supporting this are the skyrocketing bank loans. Only the export sector that is hit hard by the crisis.
Early Tuesday morning, Moody's downgraded its outlook for the European Union's debt rating to"negative" from "stable," raising the stakes in the euro-zone crisis. The change means that the rating agency is considering a lower rating for EU debt, from its current top ranked "Aaa" level.
Moody's said it had lowered its outlook because of the negative outlooks it has already issued to the sovereign ratings of key contributors to the EU budget: Germany, France, Britain and the Netherlands, which together contribute 45 per cent of the EU budget.
A lowered credit rating could lead to higher interest rates on public debt. That normally happens however only when several ratingagencies give thumbs-down signals on their outlooks.
European leaders are seen stepping up the pace of their shuttle diplomacy, as they seek to resolve the region's long-runningdebt crisis with a series of top-level meetings Tuesday.
The latest round of talks take place just hours after Moody's decision. While German Chancellor Angela Merkel yesterday hosted EU President Herman Van Rompuy in Berlin, Greek Finance Minister Yannis Stournaras met Finance Minister Wolfgang Schaeuble in the German capital for talks on Athens' 11.5-billion-euro savings plan. Also on Tuesday, French President Francois Hollande travelled to Rome for a meeting with Italian Prime Minister Mario Monti.
Van Rompuy's trip to Berlin forms part of a wider round of consultations between the EU President and European leaders this week.
After his talks with Merkel, Van Rompuy is scheduled to travel toParis and Athens.
The new Moody's assessment means that the rating agency is considering a lower rating for EU debt, from its current top ranked "AAA" level.
Moody's has already issued a negative outlook for the ratings ofkey contributors to the EU budget: Germany, France, Britain and the Netherlands, which together contribute 45 per cent of the EU budget.