Moody's Downgrades France Outlook to Negative, Maintains Rating at "AA2"

Moody's downgraded France's credit rating outlook on Friday, citing concerns over France's public finances, and paving the way for a possible downgrade

The agency, however, kept France's credit rating at "AA2."

Moody's said that the decision to change the outlook from stable to negative reflects the increased risk that the French government will not take measures to prevent a larger-than-expected budget deficit and a deterioration in debt sustainability. 

"The country's financial deterioration exceeds our expectations and contrasts with the position of governments in similarly rated countries that tend to consolidate their public finances," it added.

France's new finance minister Antoine Armand said he took note of Friday's decision but stressed that the country was capable of implementing "major reforms." He noted that the country's economy was strong and pledged to fix public finances.

Armand told AFP the country needed to take "credible" steps to address its high deficit.

Earlier this month, Fitch Ratings maintained France's rating at AA- but downgraded the outlook to negative from stable, citing heightened fiscal policy risks.