(MENAFN) Fitch Ratings stated that it has lowered the bond ratings of Cyprus' government to B, with negative outlook, reported Xinhua News.
The rating agency attributed the move to higher-than-estimated support provided by the government to the country's banking sector.
Previously, Fitch estimated that the government would provide support to the 3 largest banks in Cyprus; however, the total recapitalization costs of the sector could reach up to USD13.31 billion now.
The recent increase would boost the size of the needed official support program for Cyprus to more than USD22.63 billion; thus, the agency expects the government debt to gross domestic product (GDP) during the current year to exceed 140 percent.
In June, the island applied for a financial aid from the EU and the International Monetary Fund (IMF) as the country's 2 two biggest banks sought state support following huge losses resulting from the reduction of the Greek sovereign debt.
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