France Will Convince Investors That It's Safe: Minister
France's bond auctions have been “reassuring” so far and the country will persuade investors that it is a safe place for their money, French Budget Minister Valerie Pecresse told CNBC in an interview Thursday.
An auction of long-term French bonds earlier in the day attracted strong demand, but yields rose as investors felt nervous because of threats to cut the country's AAA credit rating.
"We are confident we have a sound economy," Pecresse said. "We are confident that France will convince investors that it's a sound economy, that it's a safe place to invest."
In the first auction of long-term debt of the year, France sold 7.96 billion ($10.2 billion) euros of 10-year to 30-year bonds, after receiving total bids for nearly 15 billion euros ($19 billion).
"For the moment, as you know, the bond auctions that France made in 2011 and now in 2012 have been reassuring," the French budget minister said.
Analysts have said that threats to downgrade France's triple-A rating were going to have effects not just on the country's borrowing costs but on those of the euro zone's rescue fund, the European Financial Stability Facility (EFSF) .
Pecresse expressed confidence that the country is a safe place for investors but said the government's priority was the economy, not keeping the top rating at any cost.
"We're not working for the credit agencies, we're working for the people and our priority now is to restore growth and reduce debt," she said.
The French budget is based on "sound forecasts" but the country needs to lower its expenses, Pecresse added.
Some analysts expressed skepticism that France will be able to cut spending in an election year, with President Nicolas Sarkozy facing a possible voter revolt at the shrinking of the country’s welfare state.
Pecresse said the government wanted "not a reduction of the welfare state but to spend better every euro that we have."