EU urges ban on ratings for nations under rescue

Agence France-Presse

Posted at Jul 11 2011 07:02 PM | Updated as of Jul 12 2011 03:03 AM

BRUSSELS - Brussels on Monday called for a ban on rating agency decisions regarding countries under internationally-approved rescue packages.

Internal Markets Commissioner Michel Barnier also said that concerned governments should be fully informed before being downgraded by ratings agencies.

"When a country belongs to the European Union and benefits from the solidarity of its members, when it follows a programme of international aid, one cannot refuse to take this into account," Barnier said in a speech.

"In these conditions one must also ask," he added, "whether sovereign ratings can be allowed when a country is under an international programme" to rescue it.

Rating agencies came under heavy EU fire last week after Moody's downgraded Portugal's rating to "junk" status, casting new doubts on the markets over EU efforts to manage the eurozone debt crisis.

Europeans were particularly angry over the timing of the ratings cut, issued just as Portugal begins to implement tough austerity measures in return for a 78-billion-euro EU-IMF bailout agreed in April -- and as the eurozone struggles to craft a new rescue package for Greece.

European Commission president Jose Manuel Barroso said that the downgrade signalled an anti-European bias and suggested it was time for a European ratings agency to emerge as a counterweight to the US-dominated groups.

"I deeply regret the decision of one rating agency to downgrade the Portuguese sovereign debt and I regret it most in terms of its timing and magnitude," Barroso said at the time.