Seven countries across Central and Eastern Europe have riskier government finances than Italy, according to Euromoneys Country Risk Survey, and three of those Serbia, Bosnia-Herzegovina and Montenegro are riskier than Spain.
Serbias government-finances score has fallen by 0.2 to 3.6 so far this year, and Bosnia and Herzegovinas by 0.4 to 3.2. Fitchs credit rating of Serbia (BB-) was put on negative watch in mid-August, mainly because of the deteriorating fiscal outlook, and has previously been downgraded by S&P to BB- (it is not rated by Moodys).
Bosnia, not covered by Fitch, is rated B2 negative by Moodys and B with S&P.
Estonia, on a score of 7.1, still has the safest government finances in the region. The country has the smallest general government (EU) debt burden of any European country, according to Eurostat, at just 6% of GDP at end-2011. Thats comparable to an EU-27 average of 82.5% of GDP.
Bulgaria ranks second in the region for its government finances. It, too, has a favourable debt position just 16.3% of GDP at end-2011 and a reasonably low deficit (2.1% of GDP), providing some fiscal wriggle-room, given the deteriorating external economic climate.
The biggest faller in the rankings is Slovenia. Its government-finances score has fallen by 0.5 (to 4.2) so far this year, narrowing the gap to Italy from 0.4 to just 0.1. Slovenias general government deficit increased to 6.4% of GDP last year and its general government debt to 47.6% of GDP. Slovenia has also seen the largest rise in bank stability risk anywhere in Europe.