Standard & Poor's is the latest rating agency taking a negative outlook on Italy's growing deficit problem. Last week, the rating agency said that it could carry out another downgrade within the next 18 months, if the reform process does not improve after the May 2006 elections.

It follows the change in outlook Fitch Ratings took last month (see ASR 7/4/05) as the country's budget situation deteriorated further. Last July, S&P downgraded the issuer rating to AA-', citing poor budgetary figures.

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