Defer action against French deficit,counsels EU official

22nd November 2004, Comments 0 comments

PARIS, Nov 22 (AFP) - Action by the European Union against France for breaching eurozone budget rules should be suspended, EU Economic Affairs Commissioner Joaquin Almunia said on Monday.

PARIS, Nov 22 (AFP) - Action by the European Union against France for breaching eurozone budget rules should be suspended, EU Economic Affairs Commissioner Joaquin Almunia said on Monday.

Referring to pressure for France to respect deficit rules in the Stability and Growth Pact, Almunia was confirming comments by an EU source in Brussels on Friday.

"I intend to present an assessment saying that France respects the stability pact rule for the instant. So, we need to suspend the procedure and keep monitoring the situation until the end of 2005," he said.

The pact states that eurozone countries risk heavy fines if their public deficit exceeds 3.0 percent of gross domestic product.

France has said it will reduce it deficit next year to 2.9 percent of output from an expected figure of about 3.6 percent this year.

But Almunia said that the excessive deficit procedure should be maintained against Germany.

Germany is expected to exceed the deficit ceiling in 2005.

"If the public deficit estimate is above three percent in 2005, then we will have to keep the procedure," Almunia said.

In its autumn forecasts, the European Commission, the European Union's executive arm, estimated Germany would have a public deficit in 2005 of 3.4 percent. Since then, Berlin has announced measures to rein in the shortfall.

German Finance Minister Hans Eichel is aiming for a deficit of 2.9 percent in 2005. However, the Bundesbank said Monday that Berlin risked exceeding the 3.0-percent limit again next year.

© AFP

Subject: French News

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