French finance minister Francois Baroin sought to calm investors' nerves on Tuesday, days after ratings agency Standard & Poor's downgraded the country's sovereign credit rating, saying they need not be concerned about France's ability to repay its debts.
Standard and Poor’s downgrade on Friday from AAA to AA+ comes as the campaign for the presidential elections in France intensifies.
“I do not dispute S&P’s decision,” Baroin said. “But it is just one out of the main three agencies.”
Fitch and Moody's have so far left France's rating unchanged.
Fitch Ratings has said it does not expect to cut France’s triple-A rating.
Meanwhile Moody’s said on Monday that, even though it saw pressure on France's rating outlook, it ws leaving its rating unchanged at triple-A with stable outlook. The agency said it would update its stance later this quarter.
“What is the risk for an investor?” Baroin asked, “Not getting his money back. What is the risk of not getting the money lent to France back? None.”
“French sovereign bonds are among the safest ones in the world. France’s signature is absolutely trustworthy,” he said.
Valerie Pecresse, French budget minister pointed to the country's budget deficit reduction in 2011 and said the country was determined to keep spending under control.
“2011 was the year of met commitments,” she said, referring to the reduction in the deficit.
“We are strongly committed and determined to take the public spending back in control,” Pecresse said, adding that S&P’s downgrade would not change the government’s plans.
Turning to the potential impact of the downgrade on Europe's rescue fund, Baroin said there was no need to expand the European Financial Stability Facility.
“The European Financial Stability Fund (EFSF) does not need to be raised,” Baroin said. “Its lending capacity remains intact.”
Pecresse said France was aiming to balance its budget by 2016.
“We are targeting a zero-percent deficit budget in 2016,” Pecresse said. “In the meantime, it will not be over 4.5 percent in 2012,” she said.