Credit ratings and yet another downgrade! (2)

The Minister of Finance lashed out at Moody's and at the Leader of the Opposition - the first for downgrading Malta unjustly ( according to the Minister) and the second for gloating irresponsibly about such downgrade.

See this link:
http://www.timesofmalta.com/articles/view/20120214/local/moody-s-malta-downgrade-is-unfair-fenech.406786

He is wrong on both counts.

He should know that taking issue with rating agencies is as counter productive as protesting aggressively against a football referee's decision.   Moody's fully explained their decision  which is fully supported by fact and reason.  Here is how Moody's justified their decision.   I highlighted the reasons why Moody's have downgraded us more then others  and the Minister should perhaps have a frank discussion with his experts to compare Malta's debt dynamics  with that of its peers.  Presumably Moody's criticism of the debt dynamics include the hidden debt sitting outside the measured deficit and debt like loans to national corporations from the banking sector against government guarantee which sooner or later will probably, very probably, be converted from contingent to real liability.

Moody's downgrades Malta's government bond rating to A3 from A2, negative outlook

Moody's Investors Service has today downgraded Malta's government bond rating to A3 from A2. The outlook remains negative.
The key drivers of today's rating action on Malta are:
1.) The uncertainty over the prospects for institutional reform in the euro area and the weak macroeconomic outlook across the region, which will continue to weigh on already fragile market confidence.
2.) Malta's relatively weak debt metrics compared with 'A' category peers and the country's reliance on the strength of the European economy, which will dampen its own growth prospects in the medium term and worsen its debt dynamics.
Moody's is maintaining a negative outlook on Malta's sovereign rating to reflect the potential for a further decline in economic and financing conditions as a result of a deterioration in the euro area debt crisis.
In a related rating action, Moody's has today also downgraded the foreign- and local-currency debt ratings of Malta Freeport Co. to A3 from A2 given its status as a government-guaranteed entity. The outlook remains negative in line with the sovereign rating.

RATIONALE FOR DOWNGRADE

As indicated in the introduction of this press release, a contributing factor underlying Moody's one-notch downgrade of Malta's government bond rating is the uncertainty over the euro area's prospects for institutional reform of its fiscal and economic framework and over the resources that will be made available to deal with the crisis. Moreover, Europe's weak macroeconomic prospects complicate the implementation of domestic austerity programmes and the structural reforms that are needed to promote competitiveness. Moody's believes that these factors will continue to weigh on market confidence, which is likely to remain fragile, with a high potential for further shocks to funding conditions. In addition to constraining the creditworthiness of all European sovereigns, the fragile financial environment increases Malta's susceptibility to financial and macroeconomic shocks given the concerns identified below.
The fragile external environment is exacerbating a number of Malta's own challenges which continue to weigh negatively on the country's debt rating and constitute the second driver of Moody's downgrade. Malta's debt metrics are among the weaker of the 'A'-rated sovereigns. Growth prospects over the medium term also appear poorer for Malta than for its peers, given the country's dependence on tourism from the euro area as its main source of economic growth. This will hinder the narrowing of the fiscal imbalance. Lower business confidence and tighter credit conditions are likely to result in weak private-sector investment, and real output growth is likely to be significantly lower than the government's forecast of over 2%. The deteriorating growth prospects and the concomitant impact on already weak debt dynamics will further reduce government financial strength and expose it to more constrained, higher-cost funding conditions.

As to the Leader of the Opposition he did not gloat, but he expressed concern at government's handling of the economy.  What does the Minister expect?  A note of congratulations for a further downgrade and yet another negative outlook which means this is by no means the end of the road?