The financial rating agency Moody’s This Friday he maintained his note of the French sovereign debt on “Aa2” but put it on negative perspectiveciting concern for their finances.
“The decision to change the outlook from stable to negative reflects the increasing risk that the government of france unlikely to implement measures that would prevent sustained larger-than-expected budget deficits and a deterioration in debt affordability,” Moody’s said.
In the same statement, the agency reaffirmed the credit rating of the European country in “Aa2”, arguing that this is supported by its “large, rich and diversified economy”.
However, by lowering the perspective, Moody’s noted that the fiscal deterioration observed is “beyond [sus] expectations and contrasts with governments of countries with a similar rating that are tending to consolidate their public finances.”
The new French Minister of EconomyAntoine Armand, took note of the decision on Friday but maintained that the country is capable of carrying out “far-reaching reforms,” adding that the country has economic strength and promising to clean up its finances.
Currently, the debt burden is the second budget item in Franceafter education, with more than 50 billion euros ($54 billion), and could become the most important between now and 2027. This reduces the room for financial maneuver.
To preserve the country’s credibility, the government wants to reduce the public deficit from 6.1% of GDP in 2024 to 5% in 2025, and put it back in line with the European objectives for 2029, at 2.8 percent.
However, the draft 2025 budget presented by Conservative Prime Minister Michel Barnier faces a hostile Parliament.
The decision of Moody’s occurs two weeks after Fitch put France under a “negative outlook” without lowering its rating.
The agency S&P must be pronounced on November 29. In May, it downgraded France’s rating from “AA” to “AA-.”
