The agency said its decision was “mainly due to a revision of the strategy to strengthen the state budget”, noting positive points in addition to the pension reform, in particular the date envisaged for the end of aid to energy with falling fuel prices.
The “AA” rating is one of the highest levels of the rating scale and indicates a strong ability to repay debt. In Europe, the ratings of Germany and the Netherlands (AAA) are the highest among the countries. France lost it in 2012.
S&P adopts a 20-degree scale, with “AAA” at the top, which is the best possible rating, and the last of which is “D”, which stands for default.
French Economy Minister Bruno Le Maire told the weekly Le Journal du Dimanche that he had “taken note of the agency’s decision”, considering it a “positive signal”.
“Our public finance strategy is clear, ambitious and credible,” he added.
And he added that he would announce on June 19 the first billion euros of savings for the 2024 budget. He had announced the end of gas subsidies, the prices of which have fallen.
For his part, the deputy of Ennahdha Jean-René Cazeneuve, general rapporteur for the Budget, said: “This sign salutes the solidity of our economy and the efforts for change that we have made, and confirms the course of recovery of public finances that we followed.
“negative” outlook
But Standard & Poor’s, one of the three main rating agencies along with Fitch and Moody’s, at the same time maintained its outlook of a “negative” outlook which could lead to a downgrade in the future.
The agency warned of the “risks” of implementing the government’s fiscal targets. In this context, she indicated “the absence of an absolute majority in the French Parliament since mid-2022, which may complicate the implementation of policies, the state of uncertainty in the global and European economies, and the tightening of conditions funding”.
“Political division creates uncertainty in the government’s ability to develop policies conducive to economic growth and fiscal consolidation,” she added.
The “Fitch” agency downgraded France last month, punishing Paris for its management of public finances and the recent social crisis.
French officials have followed the agency’s analysis, fearing for their image as good managers and reformers since Emmanuel Macron took over as president. A downgrade would have been a setback for them.
The Mayor confirmed on Wednesday that he had met with the American agency to present the French “arguments”, which he considered “convincing”.
According to the figures, France’s performance record appears less good than that of other countries classified in the same category, as noted by the Fitch agency, which lowered the French rating from “AA” to “AA- at the end of April. negative “.
And “Standard & Poor’s” declared that the volume of public debt will remain above 110% of GDP over the period 2023-2026, “with a continuing budget deficit, despite its decline”.
The debt represented 111.6% of GDP in 2022. The French government hopes to reduce this proportion to 108% in 2027.
highest debt
France is the most indebted country of the countries in the same category (AA), with a public debt of around three thousand billion euros.
And after reaching 4.7% in 2022, the French public deficit is supposed to increase slightly this year to 4.9% before gradually falling from 2024, as the government forecasts in its stabilization program that it published. in recent weeks and talks about a return to the European budget. rules (deficit below 3%) in 2027.
However, it seems that these estimates did not convince “Standard & Poor’s”, which did not speak of estimates for 2027, but expects a deficit of 3.8% in 2026 after 4.6% between 2023 and 2025. Its previous estimates were 4.9% for those years.
As for growth, S&P expects it to increase by 1.2% per year, on average, between 2023 and 2026, compared to 1.5% in its previous estimates.
And the government’s fears stem from the danger posed by the country’s falling credit rating in many cases, represented by high interest rates on borrowings from investors who demand additional collateral to lend to France.
But it seems that the markets are not afraid that France will not repay its debt, so the downgrading of Fitch’s rating has not really affected French borrowing rates.
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