(Ecofin Agency) - Fitch Ratings has downgraded France's credit rating to the lower tier of high-quality debt (AA-), drawing criticism from French Finance Minister Bruno Le Maire, who views the agency's decision as a pessimistic assessment of the nation's growth prospects and debt trajectory. Le Maire claims the downgrade overlooks the structural reforms implemented by the French government, including unemployment insurance and pension system overhauls and reductions in production taxes. He points out that Moody's, another major rating agency, has maintained France's AA rating.
This downgrade, however, is not the first warning France has received about its public debt risks. The International Monetary Fund (IMF) expressed similar concerns on March 17, 2023. Seen from Africa, this situation is an ironic twist of fate.
African governments, including Ghana, which was once seen as a model of economic governance, have long argued that international rating agencies do not adequately consider the unique challenges and difficult reforms they face. These concerns often go unheard, and financial markets are quick to penalize African countries by tightening access to international debt.
A recent report by the United Nations Development Programme (UNDP) revealed that current rating agency evaluation methods have cost Africa $74 billion in missed financing opportunities. This finding supports calls from various institutions for a new approach to assessing the debt sustainability of African nations.
While France's situation is not directly comparable to that of African countries, as it remains in the high-quality issuer category while most African nations are in the speculative zone, the issue warrants close monitoring. This is particularly true for countries in the CEMAC and UEMOA regions, which maintain strong ties with France, especially in terms of monetary cooperation.