International credit rating agency Standard & Poor's (S&P) maintained France's sovereign credit rating while urging the government to maintain its austerity fiscal policy.
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According to the daily Le Monde on the 29th (local time), S&P maintained France's sovereign credit rating at 'AA-' and also assessed the outlook as 'stable.'
In June, S&P downgraded France's credit rating from 'AA' to 'AA-' for the first time in 11 years due to the deterioration of France's fiscal condition. While maintaining the current rating, S&P pointed out that "political divisions within France have deepened, complicating fiscal management, especially with delays in the approval of a reliable budget for the next year."
It added, "Despite ongoing political uncertainty, we expect France to comply with the European Union (EU) fiscal rules and gradually consolidate public finances in the medium term, even if it takes time."
The French government plans to reduce the fiscal deficit, expected to be 6.1% of gross domestic product (GDP) this year, to 5% next year and further down to below the EU benchmark of 3% by 2029. S&P's latest assessment supports the government’s austerity budget plan.
Earlier, the French government submitted a budget plan to reduce the fiscal deficit by cutting expenditures by 41.3 billion euros (approximately 61 trillion won) and raising an additional 19.3 billion euros (28.5 trillion won) in taxes through increased levies on large corporations and the wealthy.
However, the left-wing coalition and far-right factions, major political forces in the lower house, oppose the government’s budget plan citing concerns over reduced consumer purchasing power, worsening social inequality, and increased burdens on businesses.
On the morning of the 30th, Armand, the Minister of Finance and Economy, stated at a press conference that "we are moving in the right direction," referring to S&P’s decision and the positive evaluation of France’s fiscal policy by the European Commission.
Minister Armand pointed out, "Observers (credit rating agencies) clearly understand that the absence of a budget and political instability will lead to a sharp increase in France’s debt financing costs. This will destabilize French consumption, harm corporate investment, and hinder growth." He also urged political cooperation, saying, "At this critical time, I call on everyone to fulfill their responsibilities beyond party lines for the national interest."
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