Investors are on high alert for sovereign risk ratings in 2010, with concerns highlighted by the recent financial turmoil in Dubai and Greece. Public finances in many countries are under tremendous pressure after government efforts last year to arrest the freefall in the global economy through slashing interest rates, while weaker tax revenues and higher public spending are raising debt burdens.
The greatest challenge in 2010 will be the timing of the withdrawal of these support strategies: exit too soon and the economy could relapse; exit too late and public finances could deteriorate even further. Public finances have deteriorated nearly everywhere, but the situation is more bearable in some countries than in others, with ratings staying in the spotlight.
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