The US rating agency Fitch Ratings maintained at AA on Friday long-term debt rating of France, without changing either its perspective of evolution, which remains stable.
The US rating agency Fitch Ratings maintained at AA on Friday long-term debt rating of France, without changing either its perspective of evolution, which remains stable.
The agency says in a statement that France has “a diversified economy and healthy” with “relative macro-financial stability” but a “budget deficit and high debt ratio on GDP.”
“Although less important” than in the past, “Persistent budget deficits, fueled by heavy government spending, have led public debt to reach 96% of GDP at end 2015”, said the US rating agency.
“This high level of indebtedness reduces the ability of France to face tax shock is the main weakness of sovereign debt” of the country, she said.
The French economy recorded stronger growth than expected in the first quarter, to 0.6% after 0.3% in late 2015, suggesting an economic recovery in 2016 and a slight decrease of the public debt.
But the government has announced since the beginning of the year a series of new measures that have raised fears a surge in spending and a worsening of public debt.
Bercy is committed to Brussels to bring the public deficit to 3.3% in 2016 and 2.7% in 2017. Fitch expects for its part 2.9% next year, after 3.3% this year.
The French authorities will be anxious to avoid a “flood of negative news” in terms of deficit at the approach of the presidential election. But with the tax reduction measures announced by the Executive, which coincide with possible announcements of new spending, there is indeed a fiscal risk, says the agency.
Fitch had downgraded France in December 2014 AA + to AA with a stable outlook, saying the weak economy put at risk the deficit reduction targets.
