The credit rating agency Fitch Ratings has maintained its AA Friday note long-term debt of France and its “stable” outlook, while stressing a “political risk” associated with the presidential election scheduled for next year.
The agency has justified its decision, in a press release, by the fact that France has “a diversified economy and good health”, with a “relative stability macro-financial”, while displaying a “budget deficit and debt ratio on GDP high”.
“Although less important” than in the past, “persisting fiscal deficits, fuelled by strong government spending, should lead the public debt to reach a higher to 98% of GDP at the end of 2018,” stressed the rating agency.
“The high level of indebtedness reduces the ability of France to face fiscal shocks and is the main weakness in the assessment of sovereign debt” of the country, ” she continues.
“in the past 12 months, events such as the decision of the United Kingdom to leave the european Union and the terrorist attacks that have taken place since 2015, the impact has been mildly negative on the growth prospects of already low from France”, said Fitch.
The rating agency has accordingly revised downwards its forecast of the country’s growth to 1.2% for 2016-2018, up from 1.4% previously.
It is estimated that the government will meet its target of fiscal deficit of 3.3% of GDP this year, thanks to the reduction of expenses.
On the other hand the agency, reporting to the deficit expected for next year to 3.2% of GDP, according to Fitch, above the 2.7% targeted by the government.
in addition to the “political risk” has increased, writes Fitch, for which “the possibility of a victory (the president of the national Front) Marine Le Pen in the presidential election (…) has progressed and is not negligible.”
Even if, according to opinion polls, the popularity of Ms. Le Pen has remained stable in 2016, the “populist sentiment and anti-establishment has been made in the world, as shown by the vote in favour of Brexit on the United Kingdom, and the victory of Donald Trump in the us presidential election,” said the agency.
This reflects “a resentment, an economic malaise and due to fears regarding security and immigration, which increase the risk of a political shock in France”, she said.
Fitch had downgraded France in December of 2014 from AA+ to AA, with a stable outlook, taking the view that the weak economy put at risk the deficit reduction goals.
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