Standard & Poor's on Tuesday lowered its long-term foreign and local currency sovereign credit ratings on Grenada to'CCC+' from 'B-', citing concerns about priorities linked to debt repayment. The global rating agency said there were signs of increasing fiscal pressures on Grenada and a deteriorating payment culture, demonstrated by intermittent - though "currently cured" - arrears on domestic commercial bank debt. The outlook for the country is stable. Grenada's fiscal accounts have been "severely impaired" since Hurricane Ivan in 2004, said credit analyst Olga Kalinina, with some debt restructuring a year later alleviating some of the amortisation or principal debt repayment and interest costs. "The interest cost has been cut by more than half, while the maturity of 45 per cent of the total government debt - 87 per cent of total commercial debt - has been postponed to 2025," said Kalinina. Restructuring "However, the restructuring did not address the size of the debt, which, at 121 per cent of GDP, is the third largest among speculative-grade-rated countries." Grenada's fiscal sustainability has hinged on cost containment in government spending. However, Grenada's fiscal performance has been worse than projected, said S&P, with the deficit at 7.2 per cent of GDP in 2006 for central government operations and 4.6 per cent deficit overall. Rising fiscal pressures have led to recurring delays in government debt payments, the ratings agency said. It points out though that Grenada is attempting to address its fiscal fall-out by introducing a consumption tax in October 2008, cutting tax exemptions, and working with the IMF team under the Poverty Reduction and Growth Facility "to set responsible" fiscal targets. Standard & Poor's projects the 2007 fiscal deficit at 4.7 per cent of GDP, compared with the budgeted 2.7 per cent, but expects the government debt to decline 117 per cent of GDP by year end. Reprinted from jamaica-gleaner.com