S&P Keeps France's AA-Plus Rating
French Economy Minister, Pierre Moscovici, leaves the Elysee Palace after a cabinet meeting in Paris, France, 28 September 2012. Photo by EPA/BGNES
Standard & Poor's rating agency confirmed France's long-term rating of AA+ on Friday and negative outlook but warned the government was likely to miss its public deficit target next year.
Days after rival Moody's stripped France of its Aaa rating, S&P applauded the Socialist government's plans to help restore France's competitiveness largely with tax credits to companies.
"The French government remains committed to budgetary and structural reforms that would build on measures it has proposed so far to improve the country's growth potential," S&P said.
The decision removes the immediate threat of another downgrade of France, though S&P kept a negative outlook on the country's debt. That indicates a one-in-three chance of a cut in France's credit rating during 2013.
However, the ratings agency warned that the public deficit was set to miss the government's target of 3% of national output next year, estimating a budget shortfall of 3.5%.
"The affirmation reflects our opinion that the French government remains committed to budgetary and structural reforms that would build on the measures it has proposed so far and improve the country's growth potential," it said in a statement.
Moody's downgraded France one notch to Aa1 on Monday from its to Aaa grade, taking a more skeptical view that reforms undertaken so far by the government would be sufficient to restore the country's waning international competitiveness.
That move, which followed a downgraded by S&P in January, added pressure on President Francois Hollande's government.
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