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France to borrow €178bn in 2012

The amount is slightly down on this year, but is being based on favourable rates linked to the fragile AAA

FRANCE intends to borrow €178 billion in 2012 in medium and long-term bonds.

The amount is slightly down compared to this year, because of a reduction of the budget deficit.

France is still making plans based on favourable borrowing rates, which are thought to be under threat if it loses its AAA credit rating – a prospect looking more likely after two of the large agencies have said it is at risk.

However, the Finance Ministry has aimed to reassure, saying it made its plans based on loan interest rates higher than those currently being offered.

The president of stock market regulator the AMF, Jean-Pierre Jouyet, told journalists yesterday keeping the AAA rating “would be a miracle”, “though I’d like to believe in it”.

He added he found it “regrettable” that politicians were now tending to adopt a “certain fatalism” towards the loss, which was not “banal” because it would affect interest rates.

Philippe Mills, head of Agence France Trésor (a government agency managing French debt) said it is important to stress that France is still rated AAA and its “fundamentals are good”.

If the rating was lowered, however, the significance would be relative, depending on how many other countries retained the AAA, he said.

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