Credit rating agency Fitch Ratings downgraded France from AA to AA (-). The uneasiness is increasing for the most developed countries of the world, which are on the border of inflation and recession. The rating given in terms of euro-dollar parity is also critical.
There are interesting developments regarding the ratings of credit rating agencies, which developing countries attach great importance to in order to obtain financing. Considered among the world’s largest economies, France is shaken by the rating change made by the international credit institution Fitch.
In France, which has taken various steps to support public finance, there has been a development that will put President Emmanuel Macron in a lot of trouble.
According to the statement made by Fitch, the country’s long-term foreign and local currency credit rating was lowered from “AA” to “AA-“.
Lower growth expectations, weakened competitiveness, higher-than-expected public deficits and the continued rise in public debt were cited as the reasons for the downgrade.
Macron’s latest effort to close loopholes in the system by raising the retirement age has sparked mass protests and split parliament, making it difficult to get the necessary support for future reforms.
In the assessment made by Fitch, it was stated that the imminent adoption of the pension reform will be partially positive in the medium and long term, with annual gross savings of 17.7 billion euros by 2030. Fitch cut its growth forecast for France from 1.1 percent to 0.8 percent this year and from 1.9 percent to 1.3 percent next year.
“Political stalemate and sometimes violent social movements pose a risk to Macron’s reform agenda,” the credit rating agency said. It could create pressures for a more expansionary fiscal policy or reversal of previous reforms. ” he commented.
The AA rating actually means one notch below the AAA rating, which is the highest long-term rating a country can get. However, if the grade is negative, it actually means that it is being watched closely for downgrading to a lower grade. A below credit rating for France is A level. Which, on the Fitch rating scale, indicates that the country’s economic situation may lead to financial difficulties.
It is also critical for the euro dollar parity.
It is curiously expected whether the rating decision, which came at a time when the Euro-dollar parity began to push above 1.10, will put pressure on the Euro through France, one of the most important components of the European common currency. Eyes will be turned to statements on growth and inflation data from both Europe and the USA.
Other countries currently with an AA negative status rating are Hong Kong, England, Belgium, Qatar, South Korea, Czechia, Estonia, Ireland, Kuwait.
If France’s credit rating goes down to A, then it will fall into the same category with countries such as Malta, Slovakia, Saudi Arabia, Lithuania, Japan and China.
France’s credit history
Agency Note View Date
S&P AA negative Dec 02 2022
DBRS AA (high) stable Oct 16 2020
Fitch AA negative May 15 2020
DBRS AAA negative Apr 17 2020
Moody’s Aa2 stable Feb 21 2020
Moody’s Aa2 positive May 04 2018
S&P AA stable Oct 21 2016
DBRS AAA stable Apr 29 2016
Moody’s Aa2 stable Sep 18 2015
Fitch AA stable Dec 12 2014
DBRS AAA negative Nov 07 2014
Fitch AA+ negative watch Oct 14 2014
S&P AA negative Oct 10 2014
DBRS AAA stable May 30 2014
S&P AA stable Nov 08 2013
S&P AA stable Nov 08 2013
Fitch AA+ stable Jul 12 2013
Moody’s Aa1 negative Feb 16 2012
S&P AA+ negative Jan 13 2012
Fitch AAA negative Dec 16 2011
S&P AAA negative watch Dec 05 2011
DBRS AAA stable May 12 2011
Fitch AAA stable Sep 21 2000
Fitch AAA n/a Aug 10 1994
S&P AAA stable Jun 26 1989
Moody’s Aaaa stable Jan 23 1979
S&P AAA n/a Jun 25 1975
