France faces considerable uncertainty over the approval of its 2027 budget, as the upcoming presidential election and deep political divisions could make it harder for the government to reduce the country’s deficit, Moody’s Ratings said Friday.
Moody’s is due to review France’s Aa3 sovereign rating on October 23. The rating currently has a negative outlook, meaning a downgrade remains more likely than an upgrade.
The ratings agency said its review will examine whether France’s political institutions can respond to major policy challenges despite persistent divisions in parliament.
“The ability of France’s institutions to tackle its key policy difficulties despite the political fragmentation in parliament is the key factor we are assessing for the resolution of the negative outlook,” Moody’s said in a note.
The comments came a day after the French government presented its 2027 budget proposal, as ongoing political uncertainty continues to weigh on efforts to restore the country’s public finances.
With the presidential election drawing closer and political divisions expected to remain afterward, Moody’s said there are limited signs that France will overcome its fiscal difficulties in the near term.
Goodness Anunobi
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