PARIS—The French government said it was ready to do whatever it takes to stick to its deficit-reduction plans, signaling its determination to remain among the six euro-zone nations still sporting a top-notch triple-A credit rating.
France "won't deviate one iota from its public-finance balancing plans," Budget Minister Valérie Pécresse told French radio Tuesday, as the cost of insuring the country's sovereign debt against default hovered around record levels.
Although much of the French government is on summer holiday, Ms. Pécresse and Finance Minister François Baroin have been speaking on French media since Friday's downgrade of U.S. debt, as they seek to ensure the euro zone's second-largest economy isn't swept up in a broad reassessment of the creditworthiness of highly indebted developed countries.
Budget Minister Pécresse has stopped short of announcing new revenue steps.
They have, however, stopped short of announcing new measures to boost French revenues in the event of a slowdown in growth. "If we need to make more efforts... we'll make more efforts," said Ms. Pécresse.
France's credit rating was thrust into the spotlight on Monday when the cost of insuring its debt against default jumped to a record, fueling speculation that its prized standing was at risk. Ratings firms, however, haven't given any indication that such a move is imminent, with Standard & Poor's Corp. offering strong vocal support for France's rating.
"The fundamentals can, of course, change… but for now we see clear space between the U.S. and the U.K. and France," said Mark Schofield, an analyst at Citigroup in a research note.
Credit-default insurance costs on France rose slightly Tuesday, though the yield on French 10-year government bonds fell, underscoring that Monday's jump was in large part a reaction to the U.S. downgrade.
Still, the focus on France's rating has upped the pressure on the euro zone's second-largest economy to strengthen its commitment to reaching its budget targets at a time when it is a key player in supporting euro-zone countries in bailout programs.
France stands out among the six triple-A-rated euro-zone countries for having the highest ratios of debt and deficit to GDP.
The country's budget gap shrunk to 7.1% of gross domestic product in 2010 from 7.5% the year before and the government is planning to cut it further this year to 5.7%, significantly higher than the 4.3% average in the euro zone. France has committed to slicing the deficit to 4.6% of GDP in 2012 before bringing it to 3% of GDP the following year.
It also predicts the debt-to-GDP ratio will peak at 86.9% in 2012. Next year, Mr. Baroin said, he is planning to close tax loopholes valued at €3 billion ($4.25 billion), and to continue a four-year-old policy of not replacing half of retiring civil servants.
At the end of July, the International Monetary Fund urged France to prepare contingency measures to meet its targets and warned the country can't risk missing them given the need to keep its borrowing costs low via its top-notch rating. France already pays about €45 billion a year to service its debt.
A one percentage point increase on France's €1.3 trillion of debt, which has an average maturity of 7 years and 38 days, would represent an additional yearly charge of between €12 billion and €15 billion, according to the Agence France Trésor.
Much of the focus will be on the growth trajectory. This week, the Bank of France said in its business-sentiment survey that GDP growth in the third quarter will remain at the 0.2% it forecast for the second quarter, undermining the government estimate of 2% for the year.
The first reading of GDP for the second quarter—which sets the tone for next year's budget—is due Friday. Analysts expect the data to show quarterly growth slowed to 0.3% from 0.9% in the first quarter.
Philippe Marini, a senior member of the French senate finance commission and of President Nicolas Sarkozy's party, said recent market turbulence may mean the government will have to cut its 2012 growth forecast to 1.75%.
That could have political implications for Mr. Sarkozy, with presidential elections less than a year away. In addition to denting household confidence as unemployment remains above 9%, such a move would oblige his government to carve out extra savings to meet deficit targets.
Mr. Marini says the government could find additional cutbacks of between €6 billion and €12 billion in next year's budget. "The consequences in terms of financial charges of a downgrade of the French rating would be much more painful than making the additional savings," he said.
—Nathalie Boschat contributed to this article.
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