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Debt: Fitch maintains France's rating, Le Maire “totally determined” to restore finances

After Moody's last week, the Fitch rating agency maintained France's rating on Friday, six months after downgrading it, while expressing concern about the high level of public deficit, the Minister of the Economy Bruno Le Maire saying he was “totally determined to restore public finances”.

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Debt: Fitch maintains France's rating, Le Maire “totally determined” to restore finances

After Moody's last week, the Fitch rating agency maintained France's rating on Friday, six months after downgrading it, while expressing concern about the high level of public deficit, the Minister of the Economy Bruno Le Maire saying he was “totally determined to restore public finances”. If France can boast of having “a large, rich and diversified economy, strong and efficient institutions and macro-financial stability (...) its public finances, and in particular its significant level of debt, constitute a weak point in its rating,” noted the agency in a press release published Friday.

Bruno Le Maire took “note of Fitch's decision” in a statement to AFP, saying he was “totally determined to restore France's public finances”. Fitch, which currently gives France an “AA-” rating, one of the best possible – a sign that the country remains very credible in the eyes of the markets – however judged that the debt reduction trajectory was “limited”. “The draft budget for 2024 and the multiannual program envisage only a limited reduction in the budget deficit, from 4.9% in 2023 to 4.4% in 2024,” notes the rating agency. Fitch adds for its part to expect a public deficit of 4.6% in 2024, due to a “lower estimate (than that of the government, editor's note) of growth” and the “risk that economies (. ..) are not carried out.

To straighten out the public accounts from 2024, the government has ruled out tax increases and is instead banking on growth, with a forecast of 1.4% deemed “high” by the High Council of Public Finances. It is also counting on the end of exceptional support measures for households and businesses. Debt exceeded 3,000 billion euros in the first quarter of 2023 and France plans to borrow a record amount of 285 billion euros on the markets in 2024. Fitch's rating comes with a "stable" outlook, which means that the agency does not plan to modify it in the short term. But a “significant” deterioration in growth prospects, a drop in competitiveness or an increase in the deficit could have a negative impact on France’s rating, she warns.

Also read: For the first time since 2012, the rating agency S

Fitch is the second agency to look at France this year, after Moody's last Friday which did not update its rating and before Standard

The government will have to wait another week before breathing: S

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