Standard & Poor's cut Greece's credit rating deeper into junk territory on Monday, saying the country is likely to default on its massive debts at least once by 2013, a decision Athens said ignored its efforts to secure continued funding in coming years.
The rating agency said the downgrade from B to CCC "reflects our view that there is a significantly higher likelihood of one or more defaults" as the country tries to close yawning financing gaps over
the next two years. It said the outlook is negative.
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The new cut came days after Greece's Socialist government unveiled a new austerity program aiming to save around 28 billion euros ($A38.42 billion) in new taxes and spending cuts by 2015, in tandem with an ambitious privatisation drive intended to raise some 50 billion euros ($A68.6 billion).
The twin package comes a year after unpopular pension and salary cuts mixed with higher taxes and retirement ages - despite previous pledges to avoid more blanket pain for less affluent Greeks. It will be debated in Parliament later this week and is set for ratification by early next month.
The planned new austerity has angered opposition parties, which rejected government overtures aimed to secure some degree of consensus, and drove labour unions to call a general strike on Wednesday.
Parliamentary approval of the combined cutbacks and privatisations is a precondition to secure the fifth installment of a vital 110 billion euros ($A150.92 billion) bailout package agreed on in May 2010 with the European Union and the International Monetary Fund.
"The downgrade reflects our view that implementation risks associated with the EU/IMF program are rising, given the increasingly complicated political environment in Greece coupled with its current difficult economic climate," Standard and Poor's said.
The agency said that delaying Greece's debt repayments - a move proposed by Germany to get private investors to take on some of the bailout burden and give the country more time to reform its economy - would be considered a default.
The European Central Bank is against Germany's proposed debt extension, arguing that a default by a eurozone country could have devastating consequences on Europe's broader financial sector.
Finance ministers from the 17 euro nations will gather for an emergency meeting on Tuesday to discuss how to help Greece and how to reconcile Germany's requests with those of the ECB.
