Moody’s Investors Service said the new French government’s plan to control the nation’s debt is positive for its credit outlook and the country needs to implement those measures successfully to keep its Aaa grade.
“The new administration’s strong commitment to the achievement of sustainable public finances is credit-positive,” Moody’s said today in a ‘Credit Opinion’ report. Moody’s took no rating action Thursday and kept France at Aaa with a negative outlook.
“The overall level of uncertainty regarding the government’s ability to achieve its fiscal consolidation and growth targets remains unchanged,” Moody’s said. The rating company would cut France’s grade, should the government fail to stabilize and reverse the nation’s “high” public debt ratio, it said.
“A material increase in exposure to contingent liabilities through the nation’s banks or support for euro-area peers ‘‘could also prompt’’ a downgrade, Moody’s said.
‘‘A return to a stable outlook on France’s sovereign rating would require significant progress towards improving the debt metrics and an easing of the euro-area sovereign crisis,” Moody’s said.
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