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Moody’s keeps France at Aa3 as budget pressure persists

Moody’s left France’s Aa3 sovereign rating unchanged and retained its negative outlook. The periodic assessment focused on political fragmentation and the difficulty of reducing the public deficit. The agency expects debt to exceed 120 per cent of national output in 2027, while Finance Minister Roland Lescure reiterated the government’s deficit target for that year.

Economics & Markets··Morning
A representative French institutional entrance with pale stone columns, glass doors and a tricolour flag beside the facade.

France keeps its rating and negative outlook

Credit-rating agency Moody’s left France’s sovereign rating unchanged at Aa3, retaining a negative outlook after its October assessment.[1], [2]

The agency described the periodic review as an assessment rather than a new credit-rating action. Economic diversity and strong institutions supported the credit profile, while political fragmentation complicated efforts to reduce the deficit. Moody’s lowered France from Aa2 in late 2024; Fitch and S&P currently assign an A+ rating, one notch below its assessment.[1]

Debt is projected to exceed 120 per cent of GDP

Moody’s expects public debt to exceed 120 per cent of gross domestic product in 2027. It emphasized a deficit-reducing budget for that year and sustained fiscal efforts beyond the presidential election scheduled for April and May. This year’s deficit was projected at 5.4 per cent of national output, compared with the European Union’s 3 per cent ceiling.[1]

Lescure reiterates the 2027 deficit target

Finance Minister Roland Lescure attributed the retained rating to economic resilience and the credibility of the proposed budget. He reiterated the government’s 2027 deficit target of 5 per cent and called for a budget consistent with it before year-end. Moody’s negative outlook continued alongside the unchanged rating; it did not constitute a decision to downgrade France.[1]

References

  1. News sourceDow Jones NewswiresMoody’s leaves France at Aa3 with a negative outlook↩1↩2↩3↩4
  2. News sourceLa TribuneMoody’s leaves France’s credit rating unchanged↩
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