S&P downgrades Ireland’s credit rating

Credit rating firm Standard & Poor’s cut Ireland’s AAA credit grade to AA+, warning Ireland it needed better control of its public financing.

The downgrade reflects our view that the deterioration of Ireland’s public finances is likely to require a number of years of sustained effort to repair, on a scale greater than factored into the government’s current plans, S&P said, The Times of London reported Tuesday.

S&P said Ireland’s economy put it on track to reach a debt burden more than 70 percent of its gross domestic product by 2013, a level we see as inconsistent with the prospective debt burdens of other small eurozone sovereigns in the AAA category.

In a statement, the Irish Finance Ministry said Monday the country was going through a very significant contraction in economic growth.

However, the Government is committed to restoring order to the public finances by bringing the deficit below the 3 percent limit by 2013, the statement said.

Eurozone members are restricted to budget deficits of less than 3 percent of the country’s gross domestic product.

In 2008, the Irish economy contracted by a record 2.3 percent, including a sharp drop off of 7.5 percent in the fourth quarter.