In the first half of 2020, the rating agency Fitch Ratings lowered the credit rating of a record number of countries, as many as 33, and have not yet completed the work, given that the global Covid-19 pandemic continues to erode the public finances of many countries.
In the first half of the year, that rating agency also lowered the outlook to "negative" for a record 40 countries, which indicates that potentially their ratings could be lowered as well.
"Never in the history of Fitch Ratings have we had 40 countries with a negative outlook at the same time. And that's after we've already downgraded 33 countries in the first half of the year. We've never downgraded so many countries in one year, and we've just passed the first half James McCormack, Fitch's director of state ratings, told CNBC's Capital Connection show.
Among other things, Fitch downgraded Britain, Australia and Hong Kong during that period. As for Croatia, in early June Fitch maintained its credit rating at 'BBB-', with a stable outlook.
McCormak explained that many governments had to increase budget expenditures to protect the economy from a sharp pandemic impact on its activities. It is expected that this will worsen the financial position of all 119 states for which Fitch issues ratings, he added.
These deteriorations could take the form of larger deficits, smaller budget surpluses or increased indebtedness, he noted. "What really worries us is what will happen after the crisis period caused by the coronavirus is over. I think that will be our focus and the real factor that will determine the direction of the rating movement," he concluded.