– The government escapes sanction from Fitch and Moody’s
The rating agencies Fitch and Moody’s left the sovereign ratings they assign to France unchanged on Friday evening, despite the sharp slippage in its public deficit last year.
“This decision must invite us to redouble our determination to restore our public finances,” reacted immediately the French Minister of Finance, Bruno Le Maire.
AFP
French Finance Minister Bruno Le Maire immediately “took note” of this news soberly in a brief press release, adding that “this decision must invite us to redouble our determination to restore our public finances and meet the objective set by the President of the Republic: to be below 3% (of GDP, editor’s note) deficit in 2027”.
“We will stick to our strategy based on growth and full employment, structural reforms and the reduction of public spending,” assures the minister.
This is good news for Bruno Le Maire. Fitch, which had already downgraded France’s rating in April 2023, moving it to the “AA-” level, had suggested at the start of the month that it did not intend to further lower this rating unless there was a “consequential” increase. » debt in the meantime.
Defeated predictions
Moody’s rating, “Aa2”, which remains a notch above that of Fitch, was accompanied by a stable outlook, and commentators estimated that it could be lowered to negative on Friday, which did not been the case.
Moody’s, however, considers it “unlikely” that the government will achieve its objective of reducing the deficit to 2.9% of GDP in 2027, the agency estimating that the debt could continue to increase to almost 115% of GDP in 2027, while the government believes that it will not exceed 112% on this date.
The outlook could improve if the government “succeeds in adopting and implementing measures” to significantly reduce the debt, explains Moody’s. But the outlook and the rating itself could deteriorate in the future if the debt situation deteriorates more in France than among its “peers”.
Third highest debt ratio in the EU
France’s public deficit has slipped sharply to 5.5% of GDP in 2023 instead of 4.9% hoped for, and with 110.6% of GDP debt, it has the third highest debt ratio in the world. European Union (EU) after Greece and Italy.
The ratings assigned by the two agencies still classify the country’s debt as “high quality”. France lost its triple A in 2012, marking the safest sovereign debts, like that of Germany currently.
AFP/Muriel Naudin
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