Moody's Investor Service lowered the outlook on Slovenia's Aa2 government bond ratings to stable from positive, to reflect the effects of the global economic downturn on the country's economic performance.

Jonathan Schiffer, Vice President-Senior Credit Officer at Moody's noted that as the global economic crisis deepened, Slovenia's export markets were affected negatively, which in turn slowed the pace of economic growth and weakened the fiscal and external sector outcomes. According to Schiffer, the economy's recovery would now depend on the pickup in demand from its major trading partners.

At the same time, the rating agency noted that the Slovenia's small banking system has weathered the credit crisis quite well. Schiffer pointed out that the government has acted swiftly, with imposition of an unlimited guarantee on bank deposits, a guarantee on new debt issuance by financial institutions, and the allocation of necessary budgetary funds to recapitalize banks and purchase bank assets.

Meanwhile, the rating agency maintained the country's ceilings for foreign and local currency bonds and bank deposits at Aaa with a stable outlook. Moody's said the stable outlook reflects the firm's view that the government will continue to take appropriate measures to adapt to the global crisis, focusing on measures to ensure competitiveness in the product and service markets.

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