After the reservations of local politicians and experts on the relevance of the government savings plan, the American rating agency Moody’s, in turn, is issuing serious reservations on the roadmap laid by Bruno Le Maire to reduce the public deficit.
On Wednesday March 28, ratings agency Moody’s called France’s aim to reduce the public deficit to 2.7% by 2027 “unlikely”, reports AFP. The agency estimates that this is insufficient to meet the additional savings of $10 billion planned for 2024. “Get the government on track” of established objectives. Especially with the deficit forecast for 2023 turning out to be bigger than the government’s estimate.
As a reminder, the National Institute of Statistics and Economic Studies (INSEI) estimated on Tuesday that the public deficit is 5.5% of GDP (Gross Domestic Product) in 2023, while the government is counting on 4.9% or 15.8 billion euros. More than what the government had planned. According to the American agency, this budgetary disappointment therefore calls into question the government’s ability to achieve its objectives set out in its medium-term budget plan presented in September.
Public debt risk reaches unprecedented levels
The American agency, which clarified that the opinion published on Wednesday is not strictly speaking a rating opinion, plans to update its rating on April 26. “The larger-than-expected deficit is almost entirely due to lower-than-expected revenues”, the American agency commented. For Moody’s, this “Highlights underlying risks to the government’s medium-term budgetary strategy, which is based on optimistic economic and revenue assumptions as well as unprecedented spending cuts”.
Even more alarming, Moody’s predicts an increase in public debt from this year to 2024. An increase that puts France at risk for costs associated with interest “Never seen for 20 years”.
Reacting to this “shock”, Bruno Le Maire previously explained that “Extraordinary Deficits Not Linked to Increases in Public Expenditure”But “Despite honest and realistic growth figures, lower than expected revenue”. To improve the situation, the Minister of Economy, as a reminder, has called on state operators to make proposals within a month for savings in their budgets.
