Ratings agency Moody's logo and rating grid. Jean-Marc Barrère/Hans Lucas via AFP
WASHINGTON - Ratings agency Moody's downgraded France's outlook, opening the door to a potential credit rating cut as it cited concerns over the country's finances.
The shift reflects "increasing risk that France's government will be unlikely to implement measures that would prevent sustained wider-than-expected budget deficits and a deterioration in debt affordability," said Moody's Ratings.
It changed France's outlook from "stable" to "negative."
In the same statement, the agency affirmed France's credit rating at Aa2, saying this was supported by its "large, wealthy and diversified economy."
In lowering the outlook, Moody's said the fiscal deterioration it has seen is "beyond our expectations and stands in contrast with governments in similarly rated countries that are tending to consolidate their public finances."
France's new finance minister Antoine Armand noted the decision Friday but maintained that the country is able to carry out "far-reaching reforms."
He said some have already produced results and added that the country has economic strength, while vowing to restore its public finances.
Armand told AFP that France must take "credible" steps to tackle its high deficit.
For now, Moody's said risks to France's credit profile are heightened by its political and institutional environment.
It noted the situation is "not conducive to coalescing on policy measures that will deliver sustained improvements in the budget balance."
"As a result, budget management is weaker than we had previously assessed," it added.