MercoPress. South Atlantic News Agency

Fitch says there is “no risk of contagion” from Greek debt crisis

Marc Ladreit de Lacharriere, Fitch’s chairman

Euro-zone countries face no risk of “contagion” from the debt and deficit crises afflicting Greece, Portugal and Spain, the chairman of ratings agency Fitch said in an interview with Europe radio 1.

Marc Ladreit de Lacharriere said that while the state of public finances in the three countries was “worrying ... there is really no contagion” spreading to other members of the 16-nation euro currency bloc.

Euro-zone powerhouses France and Germany enjoy sufficient “credibility” with investors “who are the deciders and the masters of the game”, he said.

Fitch, Moody's and Standard & Poor's are the leading international agencies that assess the credit-worthiness of government and company debt. Euro-zone financial markets were roiled in December when all three agencies downgraded Greece's sovereign debt, voicing doubts that Greek authorities would be able to curb public spending.

However some analysts argue that the problem is not necessarily Greece or its neighbours under the media acronym of Pigs (Portugal, Ireland, Greece, Spain) but the European banks holding sovereign bonds from those countries.

According to the International Bank of Settlements, French and Swiss banks have an exposure of 75 and 64 billion US dollars in Greece respectively. British banks have a 193 billion USD exposure in Ireland and German banks 240 billion USD in Spain.

Meanwhile, Greek officials put the final touches on an overhaul of the country's ineffective tax system as part of their urgent efforts to fix the debt crisis.

The centre-left government has pledged to fight endemic tax evasion and increase taxes on the rich, as well as duties on fuel, cigarettes and alcohol.