Standard & Poor’s (S&P) has lowered its sovereign credit rating on Greece to junk status, citing concerns over the nation’s fiscal stability and its capacity to manage its substantial debt obligations.

The ratings agency reduced Greece’s long-term sovereign credit rating to BB+ from BBB-, pushing it below investment grade. This decision reflects S&P’s assessment that Greece faces significant challenges in implementing the necessary fiscal reforms to stabilize its economy.

The downgrade is anticipated to have several immediate and long-term consequences:

• Increased Borrowing Costs: The cost of borrowing for Greece in international markets is expected to rise, making it more difficult for the country to finance its debt.
• Market Volatility: The move could trigger further volatility in financial markets, particularly in the Eurozone.
• Pressure on Euro: The downgrade adds to the existing pressure on the euro, raising concerns about the stability of the currency union.

The Greek government has been implementing austerity measures in an attempt to reduce its budget deficit and reassure investors. However, S&P believes that these measures may not be sufficient to address the underlying structural problems in the Greek economy.

The agency also expressed concerns about the potential for social unrest and political instability, which could further complicate the government’s efforts to implement reforms.

The downgrade by S&P is likely to intensify scrutiny of Greece’s financial situation and increase pressure on European leaders to find a solution to the country’s debt crisis.