France must control public finances: new minister

30th June 2011, Comments 0 comments

France must keep a tight rein on its public finances but will not let that undercut its international commitments, especially to its European partners, new Budget Minister Valerie Pecresse said on Thursday.

"I will see to it that spending is controlled and deficits are reduced, which is an absolute necessity," Pecresse said as she formally took office after a government reshuffle Wednesday sparked by finance minister Christine Lagarde's appointment to head the International Monetary Fund.

"France has taken on very strong commitments internationally, especially towards its European partners, and these commitments have to be kept and they will be," Pecresse said.

She said Europe was in the spotlight -- an apparent reference to the Greek debt crisis -- and her aim was to go even further in putting the French public finances on a sustainable basis, helped by growth which will boost revenues.

France's total public debt rose 54.9 billion euros ($78.5 billion) in the first quarter to 1.65 trillion euros or to 84.5 percent of gross domestic product, far above the EU 60 percent limit but still less than in some other members, official data showed on Thursday.

From 82.3 percent at end-2010, the government expects debt to rise to 85.4 percent of GDP this year and to 86.9 percent in 2012 before falling back to 85.6 percent in 2013.

In April, Lagarde cut her estimate for the 2011 annual budget deficit to 5.7 percent of GDP from the previous 6.0 percent but kept her estimates of 4.6 percent for next year and 3.0 percent -- the EU limit -- in 2013.

Figures on Wednesday showed that the French economy grew slightly less than expected in the first quarter, at 0.9 percent, down from an earlier estimate of 1.0 percent.

The INSEE statistics institute said last week the economy would grow 2.1 percent this year while the government expects 2.0 percent.

The European economies, led by Germany, did very well coming into 2011 but have slowed in the past few months, stoking concerns that growth may be peaking out globally after weaker data in China and the United States.

Other French data Thursday was mixed -- overall household consumption in May fell for a third consecutive month, down 0.8 percent compared with April, although that masked an improvement in consumer durables and auto sales.

© 2011 AFP

0 Comments To This Article