Policy Updates

On September 12, 2025, Fitch Ratings downgraded France's credit score from "AA-" to "A+", citing political instability and projections that public debt will rise to 121% of GDP by 2027, increasing pressure on French President Emmanuel Macron and new Prime Minister Sébastien Lecornu.

The downgrade followed a period of political turmoil, including the ousting of former Prime Minister François Bayrou after his unpopular budget plan was rejected. Fitch stated that the instability had weakened France's ability to implement fiscal consolidation. The agency projected that the public deficit would not fall below 3% of GDP by 2029 as the previous government had hoped.

Fitch warned that rising public debt constrains the country's capacity to respond to new shocks. The agency expressed skepticism that the political impasse would be resolved before the 2027 presidential election, which would further limit opportunities for fiscal consolidation.

In response, Minister of Economics and Finance Eric Lombard acknowledged the decision while emphasizing the French economy's solidity. Economists noted that while France has a diversified economy and strong household savings, it is critical to break the political paralysis to pass a budget that reduces the deficit.

On September 11, 2025, JICA and the Government of the Kingdom of Morocco signed a Record of Discussions in Rabat for a technical cooperation project to secure water resources through comprehensive sediment management.

The 48-month project focuses on creating a comprehensive sediment management plan for the Moulouya and Sebou River Basins. A key objective is the capacity development of all stakeholders, including local communities, to ensure effective planning and implementation of the management plan.

The agreement was signed by General Director Zerouali Abdelaziz of Morocco's Directorate General of Hydraulics and Chief Representative Tomoyuki Kawabata of the JICA Morocco Office. The project, implemented by the Directorate of Water Research and Planning, contributes to Sustainable Development Goal 6 (Clean water and sanitation) and Goal 13 (Climate action).

On September 11, 2025, Kenya's Prime Cabinet Secretary Dr. Musalia Mudavadi and South Korean Ambassador His Excellency Kang Hyung-Shik met in Nairobi to reaffirm their countries' partnership, focusing on enhancing cooperation in trade, innovation, and green growth.

Mudavadi highlighted Korea's contribution to Kenya's development in sectors including ICT, education, and agriculture. Key joint projects include the Konza Digital Media City, the Kenya-AIST, and the recently established International Vaccine Institute offices at the Konza Technopolis.

The Prime Cabinet Secretary underscored Kenya's commitment to enhancing cooperation in labor mobility, energy, and climate change action. He welcomed Korea’s support through KOICA projects and the planned opening of the Korea Exim Bank in Nairobi. Both officials committed to deepening cooperation in green economy initiatives, with Kenya expressing interest in joining the Global Green Growth Institute.

On September 11^th, 2025, the US State Department announced US$250 million in new public health assistance to the Philippines.

The new funding is intended to address public health challenges, with a focus on tuberculosis and maternal health. The assistance will also support investment in preparedness, detection, and response capabilities to reduce the threat of emerging diseases.

The programming builds on US$63 million in assistance announced during Philippine President Ferdinand Marcos Jr.’s official visit to Washington in July 2025. The US administration highlighted the announcement as a demonstration of its 'America First' foreign assistance approach.

On September 11, 2025, the US House Foreign Affairs Committee introduced two major pieces of legislation: the DFC Modernization Act of 2025, which proposes to increase the US DFC's lending cap to US$250 billion, and a series of bills aimed at reforming the US State Department.

The DFC Modernization Act, which closely resembles a proposal from the Trump administration, would increase the DFC's total lending cap from US$60 billion to US$250 billion. The bill would also allow the agency to invest in HICs for the first time, establish a revolving fund for equity investments, and raise the threshold for congressional notification of investments from US$10 million to US$100 million.

The second set of bills seeks to reform the US State Department by codifying changes made under US Secretary of State Marco Rubio. The proposals include the creation of an undersecretary for foreign assistance and a 'global health compact' model designed to shift funding responsibilities to partner countries, which would include a phase-out of PEPFAR funding. The legislation also suggests tying foreign assistance to a country's alignment with US policy positions.

Former OPIC CEO Robert Mosbacher Jr. expressed concern about linking the DFC bill to the more contentious State Department authorization. A short-term extension for the DFC may be necessary to allow more time for negotiation.

On September 8, 2025, at the Second Africa Climate Summit in Addis Ababa, the AU, EU, and Germany launched two flagship energy programmes, CEPA and ENGAGE, to accelerate the implementation of the African Single Electricity Market, backed by the EU's US$174.9 billion Global Gateway investment package.

The programmes aim to advance the AfSEM and the CMP. These initiatives are key components of the AU's Agenda 2063 and are designed to create a fully integrated, cross-border electricity market, targeting the creation of the world's largest interconnected power market by 2040.

The launch celebrated 25 years of the AU-:abbrEU partnership. Speakers including Dr. Kamugisha Kazaura for the AU, Her Excellency Nardos Bekele Thomas of AUDA-NEPAD, Her Excellency Teresa Ribera for the European Commission, and Dr. Bärbel Kofler for Germany's BMZ, all highlighted the programmes' role in attracting investment to deliver reliable, affordable, and clean energy. Over 600 million people in Africa currently lack access to electricity.

On September 8, 2025, Norway's Labor Party, led by Norwegian Prime Minister Jonas Gahr Støre, won the Norwegian general election with 28.2% of the vote.

With the support of four smaller center-left parties, Labor has a chance of forming a rare two-seat majority government in the 169-seat Parliament.

The anti-immigration Progress Party, led by Sylvi Listhaug, made significant gains, doubling its vote share to nearly 24% and securing 48 seats. The Conservatives, led by former Prime Minister Erna Solberg, lost ground, receiving 14.6% of the vote.

Following the election, development organizations expressed hope that the new government would maintain a strong commitment to development assistance and climate action. Several organizations called for Norway to uphold its commitment to 1% ODA/GNI to development and to take a stronger stance on international issues, including the conflict in Gaza.

On September 8, 2025, French Prime Minister François Bayrou's government collapsed after the National Assembly rejected it in a confidence vote, deepening political paralysis and creating further uncertainty around a French financial crisis.

Bayrou initiated the special parliamentary session to address France's financial situation, asking lawmakers to formally agree on the need for an immediate reduction to the public deficit. The proposed austerity measures, which included freezing welfare payments and cutting national holidays, were rejected by a broad coalition of opposition parties, from far-right to far-left groups. Bayrou planned to negotiate the details of the cuts with unions and Parliament had the vote succeeded.

The government fell by a vote of 364 to 194. Following the vote, opposition leaders called for the dissolution of parliament or the resignation of French President Emmanuel Macron, which he declined.

The day following the vote, Macron named Sébastien Lecornu prime minister, making him the 7^th prime minister to serve under Macron and the 5^th since 2022. Lecornu previously served as defense minister and has held roles in every government since 2017. Macron directed Lecornu to work with Parliament’s political parties to secure a national budget and build necessary political agreements for upcoming decisions.

The new government will face immediate pressure to pass the 2026 budget, amid scheduled nationwide protests and a potential credit rating downgrade. Proposed solutions to the budget deadlock include appointing a negotiator to secure a budget agreement, or forming a temporary government to last until the next presidential election.

On September 7, 2025, Japanese Prime Minister Shigeru Ishiba announced his resignation, citing a historic defeat in the July 2025 parliamentary election, which cost his LDP its parliamentary majority.

The July 2025 election saw the ruling coalition lose its majority in the 248-seat upper house, compounding an earlier loss in the lower house. The public rebuked the party for its handling of the economy, immigration, trade relations with the US, a political finance scandal, and a rice shortage. The LDP has governed Japan nearly uninterrupted since the 1950s.

After resisting calls from within his party to step down for over a month, Ishiba announced his resignation one day before the LDP was scheduled to decide on holding an early leadership election, which would have served as a no-confidence vote. The pressure mounted after the party's internal review of the election loss called for a "complete overhaul." The LDP is expected to hold a leadership election in early October 2025 to choose Ishiba's successor.

The next prime minister will inherit a divided party and a minority government, requiring cooperation with opposition parties to pass legislation. While Ishiba recently secured a reduction in US tariffs on Japanese exports from 25% to 15%, the overall economic situation remains a primary concern for voters.

On September 5, 2025, UK Prime Minister Keir Starmer appointed Yvette Cooper as the new Foreign Secretary, replacing David Lammy, with Shabana Mahmood replacing Cooper as the new Home Secretary, as part of a wider cabinet reshuffle.

The reshuffle followed the resignation of former Deputy Prime Minister and Housing Secretary Angela Rayner on the same day.

Cooper previously served as Home Secretary since July 2024. Mahmood was the former Justice Secretary. Lammy, the former Foreign Secretary, will now serve as Justice Secretary and Deputy Prime Minister.

As part of the reshuffle, Lucy Powell and Ian Murray were dismissed from their roles as leader of the House of Commons and Scotland Secretary, respectively.