France likely to face new 'jolts' from debt crisis: PM

15th December 2011, Comments 0 comments

Visiting French Prime Minister Francois Fillon said Thursday that his country was likely to face new "jolts" from the eurozone debt crisis amid rumors that it could lose its triple-A debt rating.

In a speech to the Sao Paulo Federation of Industries, Fillon downplayed the risk of a downgrade, stressing that "what matters is not the judgment on a given day" of rating agencies but "the politically structured and rigorous budgetary trajectory that Europe, that France have decided to adopt."

"The crisis is not over and it is likely that we will have to face jolts. Markets and rating agencies have their own logic," he said. "They deal with the immediate, the instantaneous."

Two agencies, Standard & Poor's and Moody's, have warned that they are putting France and its EU partner's debt under scrutiny, and markets see Paris as likely to drop one or even two rungs on the ratings ladder.

On Monday French President Nicolas Sarkozy appeared to accept that France is facing a downgrade of its triple-A credit rating when he declared that he would overcome this challenge to his policy.

"It would be another difficulty, but not an insurmountable one," he said in an interview with the daily Le Monde. "If they decide to take it away from us we'll face the situation with sang froid and calm."

Fillon arrived in Sao Paulo late Wednesday on the first leg of a four-day visit to Brazil.

Accompanied by three ministers and around 30 French business leaders, he was to head to Brasilia later Thursday for talks with President Dilma Rousseff on the eurozone debt crisis, bilateral trade and military sales. On Friday he travels to Rio de Janeiro.

In an interview with the daily Folha de S.Paulo published Wednesday, Fillon said that "the stagnation of the European economy can be stopped," provided the European Union reorganizes itself and sheds its debts.

Brazil, Latin America's dominant power and now the world's sixth biggest economy, posted 2010 GDP growth of 7.5 percent but expects growth of only 3.5 percent this year as a result of the eurozone debt crisis and the US economic slowdown.

Trade between France and Brazil totals more than seven billion euros ($9 billion) and some 500 French companies are operating in this country.

In his talks with Rousseff, Fillon will stress France's determination to enhance the "strategic partnership" sealed between the two countries in 2008, French officials said.

In the Folha interview, Fillon notably said he was confident of selling Rafale fighter jets to Brazil and could beat off rival bids because the aircraft's technology cannot be matched.

The Rafale, a multi-role fighter jet, is competing against US aviation giant Boeing's F/A-18 Super Hornet and Swedish manufacturer Saab's Gripen jet for a tender from Brazil to supply 36 multi-role combat aircraft.

France warned last week that defense giant Dassault would have to halt production of the Rafale if it remains unable to sell any abroad.

The country is also supplying Brazil with four diesel-electric submarines and helping it develop the non-nuclear components of its first nuclear-powered fast attack submarine.

French firms also hope to take part in infrastructure projects Brazil is currently building to host the 2014 soccer World Cup and the 2016 summer Olympics.

© 2011 AFP

0 Comments To This Article