PARIS, June 1, 2024 (BSS/AFP) - Ratings agency Standard & Poor's downgraded
France's credit score on Friday citing a deterioration in the country's
budgetary position, a blow to Emmanuel Macron's government days before EU
parliamentary elections.

In a statement, the American credit assessor justified its decision to drop
France's long-term sovereign debt rating from "AA" to "AA-" on concerns over
lower-than-expected growth.

It warned that "political fragmentation" would make it difficult for the
government to implement planned reforms to balance public finances and
forecast the budget deficit would remain above the targeted three percent of
GDP in 2027.

The S&P's first downgrade of France since 2013 puts the EU's second-largest
economy on par with the Czech Republic and Estonia but above Spain and Italy.

The announcement will sting for Macron, who has staked a reputation as an
economic reformer capable of restoring France's accounts after low growth and
high spending.

The risk of a ratings downgrade had been looming for several quarters, with
the previous "AA" assessment given a "negative outlook".

The surprise slippage in the public deficit for 2023 to 5.5 percent of Gross
Domestic Product (GDP) instead of the expected 4.9 percent did not play in
the government's favour.

France's general government debt will increase to about 112 percent of GDP by
2027, up from around 109 percent in 2023, "contrary to our previous
expectations", the agency added.

Responding to the downgrade decision, Economy Minister Bruno Le Maire
reaffirmed the government's commitment to slashing the public deficit to
below three percent by 2027.

"Our strategy remains the same: reindustrialise, achieve full employment and
keep to our trajectory to get back under the three percent deficit in 2027,"
he said in an interview with newspaper Le Parisien, insisting that nothing
would change in the daily lives of the French.

Le Maire claimed the downgrade was primarily driven by the government's
abundant spending during the Covid pandemic to provide a lifeline to
businesses and French households.

The main reason for the downgrade was because "we saved the French economy,"
he said.

Government critics offered a different rationale.

"This is where the pitiful management of public finances by the Macron/Le
Maire duo gets us!" Eric Ciotti, head of the right-wing Republicans party,
wrote on social media platform X.

Far-right leader Marine Le Pen called the Macron administration's handling of
public finances "catastrophic" and denounced the government as being "as
incompetent as they are arrogant".

A credit downgrade risks putting off investors and making it more difficult
to pay off debt.

Earlier this year, influential ratings agencies Moody's and Fitch spared
handing France a lower note.

S&P also maintained its "stable" outlook for France on Friday on
"expectations that real economic growth will accelerate and support the
government's budgetary consolidation", albeit not enough to bring down its
high debt-to-GDP ratio.

"S&P's downgrading of France's debt simply reflects an imperative that we are
already aware of: the need to continue restoring our public finances," Public
Accounts Minister Thomas Cazenave wrote in a statement sent to AFP.