Moody’s downgrading of Greece draws flak from Athens

Moody's downgrading of Greece's credit rating by three notches to B1 from Ba1 has angered the Greek government, prompting the country's finance ministry to call for tighter regulation of rating agencies.

Finance minister George Papaconstantinou said: "At a time when the global economy is fragile and market sentiment is sensitive, unbalanced and unjustified rating decisions such as Moody's can initiate damaging self-fulfilling prophecies and certainly strengthen the arguments for tighter regulation of the rating agencies themselves."

''Ultimately, Moody's downgrading of  Greece's debts reveals more about the misaligned incentives and the lack of accountability of credit rating agencies than the genuine state or prospects of the Greek economy,'' the Greek finance ministry said in a statement.

''Having completely missed the build-up of risk that led to the global financial crisis in 2008, the rating agencies are now competing with each other to be the first to identify risks that will lead to the next crisis,'' the statement added.

The Greek prime minister, George Papandreou, called an emergency meeting of his cabinet last night in a desperate attempt to calm the situation.

Even if Greece fulfils the terms of its three-year adjustment programme, its debt is projected to reach 158 per cent of gross domestic product in 2013.