French downgrade was unjustified says IMF chief economist

The IMF's chief economist, Olivier Blanchard has said that France's recent credit downgrade by Standard & Poor's (S&P) was unjustified.

Speaking to German newspaper, Sueddeutsche Zeitung, Mr Blanchard, said:

Even if France hasn't fully recovered yet, I don't see any substantial risk -- or even an increased risk -- that it won't be able to service its debt.

So, yes, in this sense I do think that the downgrade wasn't justified.

S&P downgraded France earlier this month from AA+ to AA. Mr Blanchard observed that France was able to borrow at similar rates to Germany despite recent economic difficulties.

Mr Blanchard questioned whether Germany's investment rate should be as low as it is asking "aren't there good public investment projects that it would be worth financing? "

His comments will no doubt be welcomed by the French government. President Hollande protested at the time of the downgrade that "this policy ... is the only one that can guarantee our credibility and we can judge that from the low interest rates on the markets."