Moody’s considers it “unlikely” that France will meet its objective of reducing the public deficit to 2.7% by 2027.
EMMANUEL DUNAND / AFP
The announcement comes a day after the publication of France’s public deficit figure for 2023, which slipped to 5.5% of GDP last year.
Rating agency Moody’s said this Wednesday that it did justice “unlikely” That France maintains its objective of reducing the public deficit to 2.7% by 2027 was reiterated by Economy Minister Bruno Le Maire on Tuesday. The organization specifically estimates that additional savings of 10 billion in 2024 will be insufficient. “Get the government on track” Planned Budget.
Deficit to slip to 5.5% of GDP (Gross Domestic Product) in 2023 “makes the impossible” The government’s adherence to its target of reducing the deficit to 2.7% of GDP by 2027, “As stipulated in its medium-term budget plan presented in September”, Moody’s writes in a press release. The American agency, whose schedule provides for an update of the French rating on April 26, clarified that the opinion published on Wednesday is not strictly speaking a rating opinion.
INSEE (National Institute of Statistics and Economic Studies) indicated on Tuesday that the deficit at 5.5% of GDP in 2023 is 15.8 billion euros and 0.6 percentage points higher than the government’s forecast of 4.9%, which further complicates the debt objective. Exhibited by the French Minister of Economy. Bruno Le Maire however confirmed it on Tuesday “absolute determination” To return below 3% public deficit in 2027.
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“Revenues below expectations”
“The larger-than-expected deficit is almost entirely due to lower-than-expected revenues”, Moody’s adds. This high loss “The risks underline the government’s medium-term budgetary strategy, which is based on optimistic economic and revenue assumptions as well as unprecedented spending cuts”Judges the rating agency.
Additionally, Moody’s judges “unlikely” That despite announcing savings and additional cuts in the 2024 budget, the government is maintaining its deficit target of 4.4% this year. Reducing the deficit by one percentage point in a year, barring exceptional circumstances linked to Covid, “Has been done only once since 2000”, recalls the agency. Moody’s also expects public debt levels to rise again “Slowly Slowly” From 2024, will expose the country to interest-related costs “Never seen for 20 years”.
