“Structural reforms have begun to address credit problems such as high unemployment and weakening competitiveness, but progress in sustainably reducing the budget deficit and government debt is limited,” Moody's said in its assessment.
France's public finance deficit was 5.5 percent of gross domestic product in 2023, well above the official target of 4.9 percent. This makes it “unlikely” for the government to meet its target of reducing the deficit to 2.9 percent of GDP by 2027, Moody's said.
Fitch also wrote that it will be “difficult” for France to meet its target “as measures to reduce the deficit remain largely unspecified”. France's high level of government debt and poor fiscal consolidation results are “rating weaknesses,” Fitch said.
According to Moody's projections, France's debt could reach almost 115 percent of GDP by 2027.
French Finance Minister Bruno Le Maire said the agencies' decisions should “encourage us to redouble our commitment to restore our public finances and meet the goal” of bringing the annual deficit below 3.0 percent of GDP in 2027, AFP reported.
“We will stick to our strategy based on growth and full employment, structural reforms and cuts in public spending,” Le Maire said.
