French local and regional governments (LRGs) will continue deleveraging, with debt-to-operating revenue declining to a forecast 72% in 2025, from 77% in 2022. This trend started in 2017 and, despite sizable investment programs, was only temporarily interrupted by the pandemic. During 2024-2025, S&P Global Ratings expects French LRGs to limit capex growth as they navigate a weak economic environment and still high, albeit decelerating, inflation. A generally favorable debt profile (long average maturity and high share of fixed-rate debt) will mitigate the impact of higher interest rates on interest expenses, which will remain largely below 5% of operating revenues. Robust tax revenue growth will continue to support French LRGs’ strong budgetary performance, not least due to the large share of value-added tax and tax receipts on properties in French LRGs' revenue composition (both slightly above 20% of 2023 expected operating revenues). Departments remain the most vulnerable layer.