The global ratings agency Fitch has cut France™s credit rating from
AAA to AA+ over the country™s vague economic outlook and the need for
structural reform in the world’s fifth largest economy.
On Friday, Fitch announced that France had lost its top credit rating, citing concern about the lack of growth and the buildup of government debt in the second largest economy of the European Union.
Budget risks œlie mainly to the downside, owing to the uncertain growth outlook and the ongoing eurozone crisis, even assuming no wavering in commitment to fiscal consolidation,” Fitch said in a statement.
The ratings agency added that France™s debt ratio was “significantly higher” than the AAA median of 49 percent.
œThe weaker economic outlook is the primary factor behind increases
in the budget deficit and France needs more time to meet EU rules on
government spending,” the statement said.
Fitch forecasts that the French economy will shrink by 0.3 percent in 2013, and then return to slight growth of 0.7 percent in 2014.
French Finance Minister Pierre Moscovici dismissed the loss of the top credit rating, saying, “French debt is among the safest and most liquid in the eurozone.”
“With the confidence of investors strong, French borrowing prices were low, and this confidence reinforces the government’s conviction that its strategy is the right one,” he added.
However, Friday™s figures are more gloomy than the French government’s outlook of 0.1 percent growth this year and 1.2 percent in 2014.
The International Monetary Fund expects French gross domestic product to contract 0.2 percent this year.
In January 2012, France was dropped one level to AA+ from AAA by Standard & Poor™s. Moody™s followed suit in November and knocked France off the top perch of AAA to AA+.
The downgrade represents another serious challenge to Socialist President Francois Hollande, who is struggling to revive an economy that has barely grown in more than two years and tackle unemployment, which soared to a 15-year high of 10.9 percent in May.
Even though Hollande™s government has increased taxes and implemented several reforms and spending cuts in an attempt to lower the country’s huge debt load, the measures have proven unproductive since the financial crisis in the eurozone has not been resolved and the 17-member bloc is still bogged down in recession.
MP/HGL
Republished with permission from: Press TV
On Friday, Fitch announced that France had lost its top credit rating, citing concern about the lack of growth and the buildup of government debt in the second largest economy of the European Union.
Budget risks œlie mainly to the downside, owing to the uncertain growth outlook and the ongoing eurozone crisis, even assuming no wavering in commitment to fiscal consolidation,” Fitch said in a statement.
The ratings agency added that France™s debt ratio was “significantly higher” than the AAA median of 49 percent.
Fitch forecasts that the French economy will shrink by 0.3 percent in 2013, and then return to slight growth of 0.7 percent in 2014.
French Finance Minister Pierre Moscovici dismissed the loss of the top credit rating, saying, “French debt is among the safest and most liquid in the eurozone.”
“With the confidence of investors strong, French borrowing prices were low, and this confidence reinforces the government’s conviction that its strategy is the right one,” he added.
However, Friday™s figures are more gloomy than the French government’s outlook of 0.1 percent growth this year and 1.2 percent in 2014.
The International Monetary Fund expects French gross domestic product to contract 0.2 percent this year.
In January 2012, France was dropped one level to AA+ from AAA by Standard & Poor™s. Moody™s followed suit in November and knocked France off the top perch of AAA to AA+.
The downgrade represents another serious challenge to Socialist President Francois Hollande, who is struggling to revive an economy that has barely grown in more than two years and tackle unemployment, which soared to a 15-year high of 10.9 percent in May.
Even though Hollande™s government has increased taxes and implemented several reforms and spending cuts in an attempt to lower the country’s huge debt load, the measures have proven unproductive since the financial crisis in the eurozone has not been resolved and the 17-member bloc is still bogged down in recession.
MP/HGL
No comments:
Post a Comment