MOODY'S SAYS EURO-ZONE CRISIS ONLY HALF DONE

New York, August 22- The crisis in the euro-zone's weakest countries is at best only half-way finished, with Greece and Ireland potentially needing until 2016 to completely shore up their shaky finances, Moody's Investors Service Inc. said in a report.

The rating firm said Spain, Portugal and Italy could pull out of their current predicaments by 2013, and that all five countries have already taken on the difficult, but necessary, adjustments.

"However, this adjustment is at best only half complete, depending on the country in question," the Moody's report said.

Moody's compared the ongoing imbalances faced by the region's weaker countries to a "similar crisis and adjustment period" in Finland and Sweden between 1990 and 1993. Sweden took three years to return to its pre-crisis gross domestic product, while Finland took six years, Moody's said.

"In comparative terms, the contractions of the two Iberian countries and of Italy are relatively shallow (at least so far), approaching that of Sweden, while those of Ireland and Greece (one must note that the latter does not seem to have bottomed out yet) are more similar to the deeper and longer Finnish contraction," Moody's said.

Of the long list of daunting policy reforms undertaken by the Nordic countries during that time, Moody's noted those governments had the ability to devalue their currencies in order to help reduce the costs, something countries using the single currency do not have at their disposal.

Still, Finland's and Sweden's example "indicates that success, with policy commitment and effective implementation, while difficult, is indeed possible," Moody's said.

Structural reforms are of fundamental importance to increasing competitiveness in the peripheral countries, Moody's said. There is a chance that the policies needed won't fully be implemented, with much of the responsibility on national governments, rather than external support programs.

"There is a considerable degree of implementation risks associated with those (reform) programs, which can only be mitigated by significant domestic commitment and ownership of the reform process, eventually shored up by continued external reform anchors and possibly support," Moody's said.

<