France's surging national debt is causing increasing alarm with the country risking a fresh warning on Friday over its credit rating after a downgrade.
Leading ratings agency Fitch recently lowered its rating on France's debt by one notch on 28 April to "AA-", which is approaching three trillion euros ($3.2 trillion).
It pointed to the country's hung parliament and public protests as risks to plans by President Emmanuel Macron to cut government spending.
Macron said the agency "was making a profound mistake in its political analysis" in comments to the l'Opinion magazine afterwards.
'It won't change anything'
"We will be uncompromising on the balancing of our public finances, on the reduction of our deficits and on the acceleration of the reduction of the debt," Finance Minister Bruno Le Maire told France Inter radio on Wednesday.
He said he had spoken with S&P Global and presented his analysis personally, aware of the influence global credit agencies have on financial markets where downgrades usually increase the cost of borrowing money for governments.
"Whatever happens with S&P, it won't change anything in terms of our determination to meet our targets for the public finances," Prime Minister Elisabeth Borne said on Thursday.
Macron came to power in 2017 promising to balance France's books and his first prime minister, Edouard Philippe, memorably told parliament that the country was "dancing on a volcano that is rumbling ever louder".
But unbudgeted tax cuts during Macron's first term following the so-called "Yellow Vests" protests and the Covid-19 pandemic in 2020 have led to a sharp deterioration in the public finances since.
Reforming the public finances
The country's debt currently stands at around 111 percent of gross national product (GDP), from just of 100 percent before Covid-19.
The government has brought the annual public deficit down from a 9.0 percent of GDP in 2020 to a forecast 4.9 percent this year. Its projections show it falling to below 3.0 percent by 2027 when Macron will leave office.
The public finances "were already in a degraded state before the Covid-19 pandemic, but to our eyes they now call for urgent measures", the head of the national auditing office, Pierre Moscovici, said in March.
"Reforming the public finances has to be a national priority," he argued.
France has the highest level of public spending relative to the size of its economy of all countries monitored by the Organisation for Economic Co-operation and Development (OECD), a Paris-based economic institute.
(with AFP)
