Fitch downgrades eurozone fund rating

The Fitch credit ratings agency downgrades the eurozone’s bailout fund credit rating from AAA to AA+. (File photo)

The global ratings agency Fitch has downgraded the eurozone’s temporary bailout fund from AAA to AA+, following its downgrading of France’s credit rating.

On Monday, Fitch announced that the European Financial Stability Facility’s (EFSF’s) had lost its credit rating, saying that France’s downgrading had had a Å“high weight” on the EFSF fund’s credit status.

Å“EFSF’s ratings rely on the irrevocable and unconditional guarantees and overguarantees provided by euro area member states,” the ratings agency said in a statement.

On Friday, Fitch announced that France had lost its top credit rating, citing concerns about the lack of growth and the buildup of government debt in the second largest economy of the European Union.

Fitch also forecast that the French economy would shrink by 0.3 percent in 2013.

French Finance Minister Pierre Moscovici dismissed the loss of the top credit rating, claiming, Å“French debt is among the safest and most liquid in the eurozone.”

The International Monetary Fund (IMF) expects French gross domestic product to contract 0.2 percent this year.

In January 2012, France was dropped one level to AA+ from AAA by Standard & Poorâ„¢s. Moodyâ„¢s followed suit in November.

The downgrade represents another serious challenge to Socialist President Francois Hollande, who is struggling to revive an economy that has barely grown in more than two years and tackle unemployment, which soared to a 15-year high of 10.9 percent in May.

Even though Hollandeâ„¢s government has increased taxes and implemented several reforms and spending cuts in an attempt to lower the country’s huge debt load, the measures have proven unproductive since the financial crisis in the eurozone has not been resolved and the 17-member bloc is still bogged down in recession.

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Republished with permission from: Press TV