S&P lowers France's credit rating to AA- from AA

ISTANBUL

Standard & Poor's (S&P) said Friday it lowered France's long-term foreign and local currency sovereign credit ratings to AA- from AA, adding the outlook on the long-term ratings is stable.

The global rating agency said it projects France's general government debt rising to around 112% of GDP by 2027, from approximately 109% in 2023.

"France's 2023 budget deficit was significantly higher than we previously forecast, reaching 5.5% of GDP," it said in a statement. "Although we expect the recovery of economic growth and recently implemented economic and budgetary reforms will allow France to reduce its budget deficit, we now forecast it will remain above 3% of GDP in 2027."

The stable outlook, on the other hand, reflects the agency's expectations that real economic growth will accelerate and support the government's budgetary consolidation, although this is not enough to bring down the already elevated general government debt-to-GDP ratio, it noted.

France's credit ratings could be lowered further if economic growth turns out to be materially below projections, France fails to reduce its large budget deficit and government interest payments as a share of revenue increase beyond expectations, said the agency.

The ratings could be raised if the budget deficit narrows much faster than anticipated and economic growth remains robust which would lead to a noticeable downward trajectory for the general government debt-to-GDP ratio.