” data-script=”https://static.lefigaro.fr/widget-video/short-ttl/video/index.js” >
This declaration comes the day after the publication of France’s public deficit figure for 2023, which skidded last year to 5.5% of GDP.
The rating agency Moody’s said this Wednesday that it judged “unlikely” that France maintains its objective of reducing the public deficit to 2.7% by 2027, although repeated by the Minister of the Economy Bruno Le Maire on Tuesday. The institution notably estimated that the 10 billion additional savings in 2024 would be insufficient to “put the government back on track” planned budget.
The announcement of a slippage in the deficit to 5.5% of GDP (gross domestic product) in 2023 “makes improbable” the government’s adherence to its objective of reducing the deficit to 2.7% of GDP by 2027, “as provided for in its medium-term budget plan presented in September”, writes Moody’s in a press release. The American agency, whose schedule provides for an update of the French rating on April 26, specifies that the opinion published Wednesday is not a rating opinion strictly speaking.
INSEE (National Institute of Statistics and Economic Studies) indicated on Tuesday that the deficit, at 5.5% of GDP in 2023, had exceeded by 15.8 billion euros and 0.6 percentage points, the government’s forecast which was 4.9%, further complicating the debt reduction objective displayed by the French Minister of the Economy. Bruno Le Maire nevertheless reaffirmed on Tuesday his “total determination” to return below the 3% public deficit in 2027.
Read alsoPublic deficit: Bruno Le Maire “remains totally opposed to any tax increase”
“Revenues lower than expected”
“The larger-than-expected deficit is almost entirely due to lower-than-expected revenue”, adds Moody’s. This higher deficit “underlines 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”judges the rating agency.
Furthermore, Moody’s judges “unlikely” that the government maintains its objective of a deficit of 4.4% this year despite the savings in the 2024 budget and the additional cuts announced. Reduce the deficit by one percentage point in one year, excluding exceptional circumstances linked to Covid, “has only been done once since 2000”, recalls the agency. Moody’s also expects the level of public debt to rise again “slowly” from 2024, exposing the country to interest-related costs “never seen in over 20 years”.