Slovakia criticises Moody's downgrade as 'improper and one-sided'

The Slovak Finance Ministry has criticised a credit downgrade announced by ratings agency Moody's late on Friday, saying it was based on an incorrect political evaluation.

Moody's cut the country's rating by one notch to A3 and changed its outlook to stable from negative, alongside a cut in the rating of France. It said the downgrade reflected Slovakia's "broad institutional challenges amid political tensions".

"A comprehensive reform programme on the judiciary and the media will weaken the country's checks and balances, amplifying a deteriorating trend already captured in governance indicators," Moody's said.

The Slovak leftist-nationalist government under Prime Minister Robert Fico has made a series of changes in the criminal law and police, and changed governance of the public broadcaster.

But the Finance Ministry said in a statement late on Friday a number of Moody's assessments were "improper, imprecisely interpreted and one-sided ... We consider such political commenting based on unfounded sources to be reputation risk for the agency itself."

Moody's said political tensions made policymaking difficult and the country's debt would rise above levels of similarly-rated countries.

"Despite the government's commitment to reduce the deficit in adherence with EU rules, we expect the general government's debt burden to rise further over the next few years to levels above those of similarly-rated sovereigns," Moody's said.

"The rise in debt reflects budget rigidity and implementation uncertainties around certain items of the consolidation package."

The government has enacted a series of tax hikes and other measures to cut the budget deficit to 4.7% of gross domestic product next year from 5.8% expected this year, one of the highest in Europe.

Rating agencies Standard and Poor's and Fitch affirmed the country's A+ and A- ratings earlier this year.

The country plans gross bond issuance of around 12 billion euros next year.