Moody’s completes periodic review of France’s credit rating

International credit rating agency Moody’s has completed its periodic review of France’s credit rating, highlighting the country’s strong economic fundamentals alongside mounting fiscal and political challenges.

Moody’s said France’s Aa3 credit rating is supported by its wealthy, diversified economy and strong public institutions. However, parliamentary fragmentation, political and social instability, a high and rising debt burden, and weakening debt-servicing metrics remain key challenges to the country’s creditworthiness.

The agency noted that France’s debt burden had exceeded previous expectations since its last assessment, reflecting slower economic growth and a widening budget deficit.

Moody’s also highlighted that government bond yields had risen faster than anticipated during the period. In addition, widespread social protests have emerged, potentially limiting the government’s ability to implement spending cuts.

The agency said France’s Aa3 rating was based on the assumption that the government would secure approval for a budget aimed at reducing the deficit in 2027, while financing costs and social tensions would ease to some extent over the coming months.

The review underscores the importance of France’s upcoming fiscal decisions as the government seeks to contain public debt and restore confidence in its public finances.

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