The international ratings agency Fitch on Friday lowered the outlook on France's sovereign debt from "stable" to "negative" in view of the anticipated deterioration in the country's public finances and economy this year because of the coronavirus pandemic.

But Fitch said in a statement that it was nevertheless maintaining France's long-term credit rating at "AA" for the time being.

"The revision of the outlook reflects the substantial worsening in public finances and economic activity expected this year due to the COVID-19 pandemic," Fitch said.

People walk on the banks of the Seine River in Paris on May 15 as France eases lockdown measures taken to curb the spread of the COVID-19 pandemic
People walk on the banks of the Seine River in Paris on May 15 as France eases lockdown measures taken to curb the spread of the COVID-19 pandemic AFP / BERTRAND GUAY

"The combination of much reduced economic activity due to containment measures introduced from March and government policies to support the economy in the period of enforced reduced activity will sharply increase government borrowing and indebtedness."

The deterioration of France's public finances comes at a time when its debt levels were already comparatively high and when it had made only "limited progress in fiscal consolidation since the global financial crisis" of 2008 and when real economic growth was only "moderate", the statement said.

Fitch now has two years during which it may possibly downgrade France's debt rating.

At the beginning of April, rival ratings agency S&P maintained France's credit rating at "AA" and the outlook at "stable".

Coronavirus