Greece’s credit rating was substantially lowered by Moody’s Investors Service on Monday, further undercutting confidence in the country’s ability to pay back its loans.

The Greek Finance Ministry characterized the move as “incomprehensible” and “completely unjustified” and stressed that it had made progress in cutting the state deficit last year. “Moody’s downgrading of Greece’s debt reveals more about the misaligned incentives and the lack of accountability of credit rating agencies than the genuine state or prospects of the Greek economy,” read a statement.

Moody’s acknowledged that measures toward fiscal consolidation had been made, including deep public-sector spending cuts and tax reform, but warned that the changes needed to stabilize Greece’s debts remain “very ambitious” and face “significant implementation risks.”

Unions have marched against austerity across Europe but in Greece, protests remain frequent and violent. The government has cut spending and raised taxes to reduce the deficit by approximately a third but efforts to boost revenue by cracking down on tax evasion have fallen short.

Since the meltdown in Greece last April, the South European nation was forced to implement austerity measures as a condition for financial support from its fellow European Union member states as well as the International Monetary Fund.

Although liberalization was a requirement for the €110 billion bailout, the black market is still estimated to compromise about a third of the total Greek economy. Heavy labor regulations and widespread corruption continue to impede job creation and entrepreneurship while the socialist government has been hesitant to upset the country’s powerful trade unions with additional reforms.

Privatization of ailing state-owned companies is also unpopular. Although public expenditures increased to almost 47 percent of GDP last year, the government remains heavily involved in energy, health care and public transportation. The country’s railway system alone is more than $10 billion in debt and costs Greek taxpayers €1 billion a year to keep afloat.

By some estimates, the state owns €270 billion in real estate but it doesn’t have a full inventory of what it owns.

The Greek state is more than €340 billion in debt. With a population of more than eleven million, nearly one of ten Greek workers is unemployed.

Unless the country manages to rein in public spending and increase revenue, it seems unlikely that it will avert bankruptcy without restructuring its debt obligations which would force private investors to accept tens of billions in losses.

European Union leaders are due to convene later this month to decide on a future permanent bailout mechanism for the eurozone, to replace the temporary fund that was cobbled together last year after Greece’s debt crisis threatened the stability of the monetary union.