France Questions US Downgrade; Is Confident In US Economy

Discussion in 'Wall St. News' started by ASusilovic, Aug 6, 2011.

  1. PARIS (Dow Jones)--French finance minister Francois Baroin Saturday questioned the Standard & Poor's downgrade of the U.S. government's AAA sovereign credit rating and said France has complete confidence in the U.S. economy.

    "It's one rating agency amongst the three main ones. It's just one element in the view of the financial situation of the United States. I note that Moody's and Fitch have confirmed their triple-A ratings on the U.S.," Baroin said on French radio station RTL.

    A U.S. treasury representative said after the downgrade, from AAA to AA+ with a negative outlook, that it was a judgment flawed by a $2 trillion error.

    "We can ask ourselves why Standard & Poor's has taken this decision on the basis of non-consensual figures that I'm sure the American treasury will comment on," Baroin said.

    "We have a total confidence in the solidity of the American economy and its fundamentals," he added, noting the U.S. plans to reduce spending and deficits. "This confidence is in no way interrupted by the move from this rating agency."

    S&P said the downgrade reflects their opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what would be, in their view, necessary to stabilize the government's medium-term debt dynamics.

    France, which is itself rated triple-A by all three agencies, will stick to it's deficit reduction targets come what may, Baroin said.

    "We will keep our objectives because they are inviolable," he said.

    The French government targets bringing its deficit down to 3% of gross domestic product in 2013 from an expected 5.7% this year. It projects the debt-to-GDP ratio to peak at 86.9% of GDP in 2012.

    Baroin also said France has been in contact with all the finance ministers from the Group of 7 countries, particularly over the last few days and this morning. He did not give details of the talks.
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