S&P reduces France's credit rating to “AA-” amid widening budget deficit

(MENAFN) On Friday, S&P Global Ratings downgraded France's sovereign credit rating from "AA" to "AA-", marking the first such downgrade since 2013. The American rating agency attributed this decision to France's deteriorating budget situation. According to S&P, France's budget deficit for 2023 significantly exceeded their expectations. In their statement, S&P explained that their revised estimates project that the budget deficit will remain above the 3 percent threshold of gross domestic product (GDP) beyond 2027.

Despite the French government's optimistic outlook that the public debt ratio will fall below 3 percent of GDP by 2027, S&P expressed skepticism about the realism of these projections. The agency anticipates that the public deficit in 2027 will actually be around 3.5 percent of GDP. This downgrade follows two previous reductions of French sovereign debt by S&P, the first occurring in January 2012 and the second in November 2013.

With this recent downgrade, France no longer holds a credit rating in the same category as Belgium and Britain, although its rating remains superior to that of Spain and Italy. This adjustment reflects growing concerns over France's fiscal health and the challenges it faces in managing its budgetary deficits. 

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