Paris, Sep 20 (IANS) The French government has taken note of the Moody’s decision to downgrade the country’s credit rating which healed continued weak growth and high debts, a media report said on Sunday.
In a statement issued on Friday, Moody’s placed the note of the eurozone’s second largest economy at “Aa2”, down from “Aa1”. However, it raised the outlook to “stable” from “negative”, reports Xinhua news agency.
Moody’s attributed its decision to uncertainty about recovery of French growth which “will remain low over the medium term, and to the obstacle that this will pose for any material reversal in France’s elevated debt burden in the foreseeable future”.
“The combination of structurally weaker growth, low inflation, and a more than 30 percentage point increase in the debt/GDP ratio since the onset of the global financial crisis means that the shock absorption capacity of France’s balance sheet has weakened and is no longer expected to recover materially in the next three to five years,” the statement said.
In a statement, French minister Michel Sapin said the French government was “firmly committed to continue and strengthen its policy of reforms to back French economy’s potential growth and employment”.
“Following data on tax revenues and public spending, our deficit target of 3.8 percent of GDP in 2015 is confirmed and it is expected to narrow to 3.3 percent of GDP in 2016, in accordance with government’s commitments,” he said.
Under 2016 financial plan, the ruling Socialists estimate the country’s debt-to-GDP ratio to stand “noticeably below 100 percent in 2016 before gradually falling”.
They also want to accelerate growth by 1.5 percent from an expected one percent this year.