After the reservations of local politicians and experts regarding the coherence of the government savings plan, the American rating agency Moody’s is, in turn, issuing serious reservations on the road map put in place by Bruno Le Maire to reduce the public deficit.
On Wednesday March 28, the rating agency Moody’s judged France’s objective of reducing the public deficit to 2.7% by 2027 “unlikely”, reports AFP. The agency estimates the 10 billion additional savings planned for this year 2024 insufficient to “get the government back on track” of the established objective. Particularly with the deficit forecast for 2023 which turned out to be larger than the government’s forecasts.
As a reminder, the National Institute of Statistics and Economic Studies (Insee) estimated, on Tuesday, the public deficit in 2023 at 5.5% of GDP (gross domestic product), while the government was counting on 4.9%. , or 15.8 billion euros more than what the government had planned. According to the American agency, this budgetary disappointment therefore calls into question the government’s ability to achieve its objectives set out in its medium-term budget plan presented in September.
Public debt risks reaching unprecedented levels
The American agency, which specifies however that the opinion published on Wednesday is not a rating opinion strictly speaking, plans to update its rating on April 26. “The larger-than-expected deficit is almost entirely due to lower-than-expected revenue”, comments the American agency. For Moody’s, this “highlights the risks inherent in the government’s medium-term budgetary strategy, which is based on optimistic economic and revenue assumptions, as well as unprecedented cuts in spending”.
Even more alarmist, Moody’s predicts an increase in public debt from this year 2024. An increase which risks exposing France to costs linked to interest “never seen in over 20 years”.
Reacting to this “setback”, Bruno Le Maire had previously explained that the “exceptional deficit is not linked to a surge in public spending”but “lower revenue than anticipated, despite a sincere and realistic growth figure”. To correct the situation, the Minister of the Economy has, as a reminder, called on state operators to make proposals for savings on their budgets within one month.