France has to carry out its planned cuts in spending and reduce its deficit in order to keep its top 'AAA' credit rating, budget minister Francois Baroin said.
'The objective of maintaining the 'AAA' rating is an objective that is a stretch and which in part conditions the savings policies that we want to have,' he told Canal Plus yesterday.
'We have to maintain our AAA, reduce our indebtedness to avoid being too dependent on the markets,' he added.
The crucial 'AAA' rating is the top ranking attributed by the international financial ratings agencies who evaluate the financial health of states, which allows them to borrow at more favourable rates.
Sarkozy's government has forecast the public deficit will run to 8.2% of gross domestic product this year, 6% in 2011 and 4.6% in 2012.
If this trend continues, the French public deficit will not return to the euro zone Stability Pact's theoretical maximum limit of 3% in 2013, and that is conditional on achieving growth of 2.5% from 2011.
While many of France's neighbours have announced harsh spending cuts, French President Nicolas Sarkozy has been cautious, refusing to speak of an austerity programme. But the government is planning to tighten health spending, reform pension rules and raise the minimum age for retirement in a bid to control mounting debt.
On Friday evening, international ratings agency Fitch said it had downgraded Spain's debt rating because the process of reducing private debt will affect the country's economic growth.
The downgrading of Spain from the maximum 'AAA' rating to 'AA+' comes as the Spanish government, under pressure from both its EU partners and the markets, approved tough austerity measures to shore up its public finances amid fears it could follow Greece into a financial crisis.
