France to speed debt reduction through cuts and growth
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The French government hopes the cuts it will introduce will aid in reducing the country's yearly budget deficit and public debt, which are among the biggest in the eurozone.
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French Finance Minister Bruno Le Maire speaks to media outside the IMF in Washington, D.C., US, April 12, 2023. (Reuters)
The French government announced Thursday that public expenditure cutbacks and hoped-for higher growth will aid in reducing the country's yearly budget deficit and public debt, which are among the biggest in the eurozone.
Finance Minister Bruno Le Maire told reporters that it is time to "cool off" on public expenditure, adding that "this is about France's European credibility."
France's budget deficit reached 4.7 percent of GDP in 2022, after being stretched by the government's "whatever it takes" response to the coronavirus epidemic and enormous support to consumers and industry due to recent inflation peaks, and is expected to rise to 4.9 percent this year.
France's public debt exceeded the $3 trillion mark (€2,950.0 billion), which marks an increase of 126.4 billion euros ($137 billion) over the past year.
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Le Maire stated that his goal is to reduce it to 2.7 percent of GDP by 2027, the conclusion of President Emmanuel Macron's second term.
That is 0.2 percentage points less than his earlier objective and well inside the European Union's normal-time ceiling of 3.0 percent.
The strategy is bolstered in part by a more positive growth prediction of 1.0 percent this year, 1.6 percent in 2024, and 1.8 percent by 2027.
In addition, the finance ministry will now work to decrease overall public debt from 112 percent of GDP to 108 percent of GDP during the same time frame, which is several points lower than originally proposed.
According to Eurostat, France's debt-to-GDP ratio was far above the theoretical European ceiling of 60 percent in the third quarter of 2022, trailing only Greece, Italy, Portugal, and Spain.
Paris is optimistic that price rise will begin to decline in the coming months, with an average number of 4.9 percent predicted for this year, up from 4.2 percent before.
Le Maire's data will be handed to the European Commission on Thursday as part of France's "Stability Programme," which is filed by EU member states each spring.
