* Outlook remains negative, agency says
* Fitch's Riley sees 2013 deficit overshoot
* Hollande sees growth pickup in 2013
* Notes market rates on French debt at lows
PARIS, Dec 14 Fitch Ratings stuck by its
triple-A rating on France in a much-awaited review on Friday but
predicted a peak in debt in 2014 at a level that it said was the
maximum for a country with a top-notch credit grade.
Fitch is the only agency to retain an AAA rating on the euro
zone's second-largest economy. It kept to its negative outlook,
saying that indicated a slightly greater than 50 percent chance
of a downgrade in future.
The ratings agency forecast growth of only 0.3 percent in
2013, well below the 0.8 percent the 2013 budget is built on,
and believes the government will not be able to narrow the
public deficit as by much as it hopes.
Fitch managing director David Riley told Reuters the deficit
was likely to come in at 3.6 percent of national output, more
than the 3 percent targeted by President Francois Hollande's
"The combination of weaker growth and slightly larger
deficits compared to the government forecasts mean that we
expect government debt to peak at 94 percent (of GDP) in 2014
and gradually decline thereafter," Riley said.
The French government forecasts debt peaking in 2013 at 91.3
percent of GDP and dipping in 2014 to 90.5 percent.
"The key fiscal trigger for a rating action is not the
precise 'point' forecast but rather confidence that government
debt to GDP ratio will indeed be on a firm downward path from
2014," he added.
Many economists expect growth to be far weaker than the
government says and that it will be necessary to cut spending
further or raise more tax income to meet deficit targets.
Hollande hit back at a news conference after an EU summit in
Brussels, saying he saw an economic recovery emerging in 2013.
"France does not determine its economic policy according to
credit ratings agencies, it does it according to what is right
for France," Hollande said.
He noted that the interest rates investors demand to hold
French debt, a gauge of market confidence, were near historic
lows in recent months.
Fitch raised its forecast for the country's debt in 2014 to
94 percent of GDP from an earlier 92 percent - higher than any
other top-rated sovereign except the United States and Britain.
"This is at the limit of the level of indebtedness
consistent with France retaining its 'AAA' status assuming the
government debt is firmly placed on a sustainable downward path
from 2014," Fitch said in a statement.
Last month, Moody's cut France by one notch from AAA to Aa1
- causing only muted investor reaction - following a similar
downgrade by Standard & Poor's in January.
Despite those cuts, Finance Minister Pierre Moscovici said
that ratings agencies ultimately had faith in France.
"They all say the same thing. France is not the country that
some people like to make fun of. France's is not a country of
baguette eaters with a beret on the head," he told radio station