PARIS (Reuters) -France should step up its efforts to revive its public finances and meet its medium-term fiscal target, Finance Minister Bruno Le Maire said on Friday after Moody’s and Fitch decided to spare the country an embarrassing downgrade.
Their decisions to leave France’s ratings unchanged were far from assured after the finance ministry had to revise its fiscal targets this month for the coming years after missing last year’s due to weaker-than-expected tax income.
“This decision should encourage us to redouble our determination to re-establish our public finances and meet the president’s objective of (reducing) the deficit to less than 3% (of GDP) by 2027,” Le Maire said in a statement.
His ministry warned earlier this month that France would overshoot its budget deficit target for a second straight year, revising its 2024 deficit outlook to 5.1% of output from 4.4% previously.
It also had to come up with another 10 billion euros ($10.7 billion) in emergency budget savings to meet the revised target, on top of the 10 billion already announced in February.
While successive French governments have long struggled to meet their deficit targets, the recent rapid deterioration of the public accounts has become a major weakness for President Emmanuel Macron’s government.
A ratings downgrade would have made an embarrassing stain on its economic record ahead of EU parliamentary elections in June, in which the far right is leading by a wide margin.
However, the government is not yet out of the woods as Standard & Poor’s is due to update its rating at the end of May and it has a negative outlook on its AA rating for a downgrade.
($1 = 0.9353 euros)
(Reporting by Leigh ThomasEditing by Chris Reese, Alistair Bell and Diane Craft)
