Wolfgang Schaeuble
Wolfgang Schaeuble, the German Finance Minister, said the Greek government has destroyed improvementsReuters

Credit ratings agency Standard & Poors has downgraded Greece's credit rating one level, warning that it may not be able to meet its debt and other financial commitments.

Both Greece's long term and short term sovereign credit ratings were downgraded to CCC+/C with a negative outlook, a move that suggests the likelihood of a Greek default has increased.

Greece has said it may not have sufficient cash to make payments due to creditors in May 2015 and wants to reach a deal to secure additional financial assistance. It wants to reach at least an outline agreement when it meets with creditors on April 24 in the Latvian capital of Riga.

Greece's creditors are also keen to secure a new deal although they insist that Athens implements a programme of economic reforms that would improve its public finances before agreeing to any new financial assistance.

Greece's left-wing government was elected in January after pledging to end the austerity measures that Greeks blame for bringing the economy to its knees.

"No one has a clue how we can reach agreement on an ambitious programme," German finance minister Wolfgang Schaeuble told a Council on Foreign Relations meeting on 16 April.

The current government had "destroyed" the economic policies implemented by the previous administration, Schaeuble said.

What are sovereign credit ratings?

Sovereign ratings are given by three main agencies: Fitch, Moody's and Standard & Poor's.

Ratings are used by investors to determine the interest rate at which they should lend to a country.

The decision is based on the likelihood that a country will repay its debts.

The latest downgrade could make investors less likely to take on Greek debt, or at least force Greece to offer higher interest rates when selling its debt.