By Ovunc Kutlu
ISTANBUL (AA) - French President Emmanuel Macron’s decision to call a snap parliamentary election raises uncertainty around the country’s fiscal path and prospects for economic reforms, Fitch Ratings said Tuesday.
The outcome of the election is expected to influence the "scope and nature" of fiscal consolidation measures and may increase challenges to policy implementation, it said in a statement.
"If no party wins an absolute majority, it is unclear what a potential coalition government would look like and how stable it would be," it said.
"The election could lead to a so-called ‘cohabitation’, where the president and prime minster are from opposing parties. This would complicate policymaking as it would entail a significant shift in responsibility for economic and fiscal policy from the Presidency to the largest political party or grouping in the National Assembly," it added.
Fitch said the outgoing government’s 2024 Stability Programme had a goal of bringing the budget deficit below 3% of GDP by 2027, but it did not fully specify the measures to achieve this.
It forecast general government debt increasing to 112.8% of GDP by 2027, from 110.6% in 2023.