France's deficit targets unlikely to be met, Moody's says

(Adds details, quote, background) PARIS, March 27 (Reuters) - France's wider-than-expected public sector budget deficit last year makes it unlikely the country would be able to stick to its fiscal targets in the coming years, credit rating agency Moody's said on Wednesday.

France's wider-than-expected public sector budget deficit last year makes it unlikely the country would be able to stick to its fiscal targets in the coming years, credit rating agency Moody's said on Wednesday. The country had a fiscal shortfall in 2023 of 5.5% of economic output, France's statistics agency INSEE said on Tuesday, up from 4.8% in 2022 and significantly more than the government's target of 4.9%.

"Though the government has not changed its fiscal targets, in our view the larger-than-expected 2023 deficit makes it unlikely that the government will succeed in reducing the deficit to 2.7% of GDP by 2027," Moody's senior vice president Sarah Carlson said in a research comment, referring to the government target for that year. Early this fiscal year, the government in February announced 10 billion euros ($10.82 billion) in emergency budget cuts and indicated more will likely be needed to trim the deficit to its target of 4.4% of GDP this year.

Moody's said the 10 billion euros in cuts and previously announced measures would probably be insufficient, adding that a bigger effort would be without precedent since 2000. The latest data point to higher debt for longer than previously expected, Moody's said, adding that France's medium-term fiscal strategy was built on overly optimistic economic and revenue assumptions.

Moody's is slated to update its rating on French sovereign debt on April 26, which is currently at Aa2 with a stable outlook.