“Structural reforms have started to address credit challenges 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 general government deficit was 5.5 percent of gross domestic product in 2023, significantly larger than the official 4.9 percent target. This makes it “unlikely” that the government will reach its goal 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 achieve its target “as deficit narrowing measures remain largely unspecified.” France’s high level of government debt and poor record of fiscal consolidation are “a rating weakness,” 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 that the agencies’ decisions should “encourage us to redouble our determination to restore our public finances and meet the objective” of getting the annual deficit below 3.0 percent of GDP in 2027, AFP reported.
“We will keep to our strategy based on growth and full employment, structural reforms and the reduction of public spending,” Le Maire said.