Fitch Ratings has lowered France's principal credit rating by a notch, reflecting the country's elevated government debt and weak economy.

France's Socialist government unveiled a modest stimulus plan this week focusing on new technology and ecology, in an attempt to boost Europe's No. 2 economy which is back in recession.

Fitch said Friday it cut France's long-term foreign and local currency issuer default ratings to "AA+" from "AAA." It said the outlook was stable.

The other two big rating agencies, Moody's Investors Service and Standard & Poor's, downgraded France's rating last year.

At the same time, Fitch affirmed France's short-term foreign currency issuer default rating at F1 and its country ceiling at AAA.

The rating agency says it estimates France's government debt will peak at 96 percent of gross domestic product next year and to decline only gradually over the long term.

French Finance Minister Pierre Moscovici noted that France's rating is still quite high, crediting France's large, diversified economy and government reforms.

"French debt is among the most safe and most liquid in the eurozone, benefiting from a historically low interest rate, proof of the confirmed confidence of investors," Moscovici said in a statement.

He said France was determined to continue to reduce its deficit, although the government recently won a reprieve from the European Commission in order to make budget cuts more slowly. The government had originally intended to bring its budget in line with the European limit of 3 percent of gross domestic product this year, but it will likely be closer to 4 percent.

Fitch noted in its statement that, on the plus side, France's economy is diverse and its political stability is anchored by strong civil and social institutions. The country has a "track record" of stability in its financial system, including low and stable inflation, Fitch said.

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Associated Press writer Sarah DiLorenzo in Paris contributed to this report.

 

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