France vows to retain top credit rating

French Finance Minister Francois Baroin said yesterday his country will do everything in its power to maintain its triple-A rating, while also warning that Paris could reduce the economic growth forecast for next year.

France’s Finance Minister Francois Baroin says his country will endeavor hard to preserve its triple-A rating. AP photo.

France’s Finance Minister Francois Baroin says his country will endeavor hard to preserve its triple-A rating. AP photo.

The statement comes after ratings agency Moody’s warned it may place the country on negative watch, saying France’s financial strength has been weakened.

“We will be there to preserve our triple-A rating… We will do everything in our power not to be downgraded,” Baroin told France-2 television after Moody’s issued the warning.

Baroin said France had room to manoeuvre to protect its top credit rating which allows it to borrow at more favorable interest rates.

“We have room to manoeuvre… We will take all the measures so there is no concern,” he said. “Everything has been put in place over the past three years to avert a downgrade.” The minister pointed toward structural reforms, such as raising the retirement age and public-sector cuts.

But Baroin also warned that France may have to lower its growth expectation for 2012, saying the forecast of 1.75 percent was “probably too high” and that “there is a risk” growth will be below 1.5 percent.

Moody’s fired a warning shot at France on Monday, saying it would determine over the coming three months whether Europe’s second-largest economy merited its current status given its weakening economy.

If Moody’s changes the French credit rating from stable to negative following that assessment, that would signal a likely downgrade in future, something the French government is anxious to avoid.

Tuesday, October 18, 2011
PARIS – Agence France-Presse