Arab Today, arab today france basks on bond market but must cut deficit
Last Updated : GMT 17:02:31
Arab Today, arab today
Arab Today, arab today

France basks on bond market, but must cut deficit

Arab Today, arab today

Arab Today, arab today France basks on bond market, but must cut deficit

Paris - AFP

France needs to borrow 170 billion euros ($220 billion) next year but the rates at which it borrows are likely to remain low provided it holds to targets for cutting the public deficit. Another factor playing in favour of low borrowing rates for France, despite the \"critical\" state of its debt, is the high risk associated with bonds issued by Greece, Portugal, Spain and to a lesser extent Italy. Risk aversion has driven funds into assets regarded as relatively secure, and so far this asset class includes French government bonds. The borrowing target emerged with details of the budget for next year, presented on Friday. The budget is intended to raise taxes and cut spending by a total of 36.9 billion euros ($47.6 billion), against a background of unexpectedly weak growth, to reduce the public deficit from 4.5 percent of gross domestic product this year to 3.0 percent in 2013, in line with a European Union limit. Finance Minister Pierre Moscovici, presenting the new Socialist government\'s first budget to the public finance committee of the National Assembly (parliament), warned the country\'s debt is approaching the danger zone. \"We are now at 91 percent (debt to output), which is an absolutely critical level as it is accepted by every economist that debt above 90 percent represents a sustained threat to growth.\" This year France has been able to borrow at exceptionally low levels, even at theoretically negative rates for some short-term debt since the beginning of July. Even though one of the leading credit rating agencies, Standard&Poor\'s downgraded its prized triple \"A\" rating for France in January, France has been able to borrow for the medium and long term at rates of less than 2.0 percent. The French debt management agency AFT describes these rates as \"a record\". These conditions mean that the cost of servicing the debt this year could turn out to be 2.1 billion euros less than the finance ministry had planned for a year ago. -- Structural reforms needed -- Several economists contacted by AFP hold that these conditions are likely to continue in coming months. At Oddo Securities, chief economist Bruno Cavalier, said: \"For as long as unfavourable winds buffet countries in the south of the eurozone, and particularly Spain, investors will continue to have an interest in looking for safety and in looking towards French debt.\" Two other top rating agencies, Fitch and Moody\'s, still give France an \"AAA\" rating although Moody\'s is due to say in October whether or not it will maintain this. At Natixis bank, Jean-Francois Robin commented: \"This means that France is regarded as having this rating by professional investors (such as pension funds and institutional investors) which have to hold assets of this quality in their portfolios.\" The risk that France could slip into recession should not therefore discourage investors. At Credit Agricole bank, economist Frederik Ducrozet commented that \"the question which stalks the market is not the recession -- a recessionary outlook would hit risky assets such as shares, but would have far less effect on the government bonds.\" He said \"the vital issue is whether the government can meet its targets for reducing the deficits,\" referring to the public deficit covering central government, local government and welfare budgets. Deutsche Bank chief economist Gilles Moec said that the deficit reduction target \"is credible for the time being and the market is taking the government at its word.\" He argued: \"So the risk is not that short-term interest rates will begin shooting up but rather a slow rise next year if it is seen that the target of 3.0 percent cannot be met because the forecast of growth of 0.8 percent for 2013 will not materialise.\" Ducrozet observed: \"Even if growth is less than expected, there is little risk that the government will go back on its budget targets. The case of Rajoy (the Spanish prime minister) will serve as an example.\" In December of 2011, Mariano Rajoy, who had only recently been elected to power, increased sharply the target for the public deficit and in doing so destabilised the confidence of investors. The European Central Bank came to the rescue announcing its first long-term refinancing operation, which had the effect of preventing the borrowing rates on bonds issued by Spain, the fourth-biggest economy in the eurozone, from shooting up again to unsustainable levels and staying there. France must also accompany its intentions to bring down the public deficit and subsequently the debt, by presenting a programme for long-term structural reforms. \"The government is sending a message with talk of a \'competitiveness shock\' and of opening up the labour market. It has to begin turning words into actions,\" Moec stressed. In this context, \"disagreement within the governing Socialist majority or a marked split between the government and trades unions\" would be a bad sign, he said.

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today france basks on bond market but must cut deficit Arab Today, arab today france basks on bond market but must cut deficit

 



Arab Today, arab today
Arab Today, arab today Nohan Seyam designs beautiful accessories

GMT 20:02 2017 Tuesday ,21 February

Nohan Seyam designs beautiful accessories
Arab Today, arab today Tourism shows signs of recovery

GMT 09:59 2017 Monday ,20 February

Tourism shows signs of recovery
Arab Today, arab today Sarah Belamesh designs antiques of "ceramic"

GMT 19:45 2017 Monday ,20 February

Sarah Belamesh designs antiques of "ceramic"
Arab Today, arab today Top Yemen commander killed

GMT 09:55 2017 Wednesday ,22 February

Top Yemen commander killed
Arab Today, arab today Media host Mona Iraqi stresses her show's success

GMT 15:32 2017 Wednesday ,22 February

Media host Mona Iraqi stresses her show's success

GMT 20:59 2017 Tuesday ,21 February

Economy good, but homes in German cities overpriced

GMT 05:29 2017 Tuesday ,21 February

Sovereign funds pulled $38bn from markets in 2016

GMT 05:15 2017 Tuesday ,21 February

Gold firms as markets await Trump tax plans

GMT 04:58 2017 Tuesday ,21 February

EU, IMF in ‘common position’ on Greece crisis

GMT 14:57 2017 Monday ,20 February

A giant initial public offering on track

GMT 14:50 2017 Monday ,20 February

Energy Market Research
View News in Arabic - Business: نفط وبتروكيماويات
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today To hold social dialogue over secondary school

GMT 07:43 2017 Wednesday ,22 February

To hold social dialogue over secondary school
Arab Today, arab today 63-Year-Old Woman Delivers Baby

GMT 12:35 2017 Tuesday ,21 February

63-Year-Old Woman Delivers Baby
Arab Today, arab today Milan laughs while Rome cries

GMT 10:28 2017 Wednesday ,22 February

Milan laughs while Rome cries
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today Nissan enhances sales in most markets

GMT 14:08 2017 Monday ,20 February

Nissan enhances sales in most markets
Arab Today, arab today Competes Sweden and Germans by S90

GMT 22:36 2017 Thursday ,16 February

Competes Sweden and Germans by S90
Arab Today, arab today Janat pleased for issuing 'Good Morning'

GMT 06:41 2017 Monday ,20 February

Janat pleased for issuing 'Good Morning'
Arab Today, arab today Small ponds have outsized impact

GMT 15:53 2017 Tuesday ,21 February

Small ponds have outsized impact

GMT 06:34 2017 Sunday ,19 February

Ahmed Fahmy stresses he did not ignore singing

GMT 06:50 2017 Wednesday ,15 February

Tragic fluctuations of Bakhtiari's life revealed

GMT 12:22 2017 Monday ,20 February

Kanye West puts hijab-wearing model

GMT 14:06 2017 Friday ,17 February

London to tax old cars

GMT 23:29 2017 Thursday ,16 February

Home built on sand castles-style costs $8m

GMT 05:15 2017 Tuesday ,21 February

Omega 3 can reduce asthma cases

GMT 19:16 2017 Friday ,17 February

Aziz House ready to host the tourists

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 12:39 2017 Monday ,20 February

newest smartphone another winner for Huawei

GMT 16:08 2017 Wednesday ,15 February

Shawsh reveals her collection "Jewelry of dreams"
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday