Outgoing French government aims to meet EU fiscal target
France is on course to deliver this year its first budget deficit in a decade in line with EU rules, the outgoing government of President Francois Hollande said on Wednesday, eager to leave a legacy of sound fiscal management.
The Socialist government of France has gradually, but steadily, reduced the deficit since Hollande took office in 2012, though Paris' partners in Brussels and Berlin have occasionally preferred faster action.
Pres. Francois Hollande's government said it now expected a deficit of 2.8 percent of economic output this year, which though slightly bigger than the 2.7 percent previously forecast would be the first since 2007 below an EU-imposed threshold of 3.0 percent.
"France is not bankrupt. It's not on a cliff or on the eve of a financial catastrophe," Finance Minister Michel Sapin said in a statement.
"In reality, after five years of rigorous managing, France is only several steps away from definitively reviving the public finances," he added.
The government left its growth forecast for 2017 unchanged at 1.5 percent in an annual update of its long-term public finance plans, which are to be sent to the European Commission in coming weeks.
France's independent fiscal watchdog, the High Council for the Public Finances, judged the growth estimate to be "plausible", though a little optimistic compared to other available forecasts.
The government forecast that the public deficit would keep falling steadily to 1.3 percent by 2020, though the incoming administration, after France elects a new president next month, will likely revise growth and public finance forecasts.
Of the main candidates in the two-round election, only centrist Emmanuel Macron and conservative Francois Fillon have set reducing the deficit as a priority.
For its part, the current government estimated the economy would grow again by 1.5 percent in 2018 year before gradually picking up to 1.7 percent in 2020.
The fiscal watchdog, which is tasked by law with giving its opinion on the government's projections, said in a statement that those estimates were a reasonable basis for building forecasts for the public finances.
However, it urged the next administration to use more realistic estimates of France's growth potential under optimum circumstances, which is used to calculate the structural deficit and give a picture of the public finances excluding swings in the business cycle. Nampa/Reuters
Pres. Francois Hollande's government said it now expected a deficit of 2.8 percent of economic output this year, which though slightly bigger than the 2.7 percent previously forecast would be the first since 2007 below an EU-imposed threshold of 3.0 percent.
"France is not bankrupt. It's not on a cliff or on the eve of a financial catastrophe," Finance Minister Michel Sapin said in a statement.
"In reality, after five years of rigorous managing, France is only several steps away from definitively reviving the public finances," he added.
The government left its growth forecast for 2017 unchanged at 1.5 percent in an annual update of its long-term public finance plans, which are to be sent to the European Commission in coming weeks.
France's independent fiscal watchdog, the High Council for the Public Finances, judged the growth estimate to be "plausible", though a little optimistic compared to other available forecasts.
The government forecast that the public deficit would keep falling steadily to 1.3 percent by 2020, though the incoming administration, after France elects a new president next month, will likely revise growth and public finance forecasts.
Of the main candidates in the two-round election, only centrist Emmanuel Macron and conservative Francois Fillon have set reducing the deficit as a priority.
For its part, the current government estimated the economy would grow again by 1.5 percent in 2018 year before gradually picking up to 1.7 percent in 2020.
The fiscal watchdog, which is tasked by law with giving its opinion on the government's projections, said in a statement that those estimates were a reasonable basis for building forecasts for the public finances.
However, it urged the next administration to use more realistic estimates of France's growth potential under optimum circumstances, which is used to calculate the structural deficit and give a picture of the public finances excluding swings in the business cycle. Nampa/Reuters
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