Relief at Bercy: the rating agencies are not sanctioning France, despite the recent deterioration of the country’s public finances. Moody’s maintained France’s sovereign rating this Friday, April 26, at the “Aa2” level with a stable outlook, judging the risk of default to be very low. Same verdict from Fitch, which downgraded the French rating last year: it remains unchanged, at the “AA-” level with a stable outlook.
The French Minister of Economy and Finance, Bruno Le Maire, declared this Friday evening to take “note” of the decision of the two rating agencies. “This decision should invite us to redouble our determination to restore our public finances and meet the objective set by the President of the Republic: to be below 3% deficit in 2027,” declared the minister in a press release.
A public deficit of 5.5% in 2023
In February, the government had to lower expected growth this year from 1.4% to 1%, and announce that it had to urgently find 10 billion in savings in the state budget. At the end of March, it was the National Institute of Statistics (Insee) which announced that the public deficit had slipped to 5.5% of GDP in 2023 instead of 4.9%. And as Bercy had to recognize that it would still be 5.1% this year, instead of 4.4%, various efforts of 10 billion euros must still be made until the end of the year.
However, observe the economists of the Postal Bank, the unpleasant surprise comes more from “revenues lower than expectations by 21 billion euros” last year, than from expenses, which, for their part, “have been controlled: they are increasing +3.7% after +4.0% in 2022. As a proportion of GDP, observe these economists in their latest Rebond note, they “continue to decline and stand at 57.3% of GDP after 58.8% in 2022 and 59.6% in 2021”, while remaining at a level higher than pre-Covid. Observers are also concerned about the amount of debt, which exceeds 3,000 billion euros and now reaches 110.6% of French GDP.