French overspending falls in 2006

12th February 2007, Comments 0 comments

PARIS, Feb 12, 2007 (AFP) - French budget overspending is set to be less than 2.7 percent of output in 2006, Prime Minister Dominique de Villepin said on Monday, signalling a figure well below the eurozone 3.0-percent ceiling.

PARIS, Feb 12, 2007 (AFP) - French budget overspending is set to be less than 2.7 percent of output in 2006, Prime Minister Dominique de Villepin said on Monday, signalling a figure well below the eurozone 3.0-percent ceiling.

Villepin said that the public deficit, covering spending by central government, by local authorities and on welfare provision, would be "without doubt less than 2.7 percent" of gross domestic product.

Economy and Finance Minister Thierry Breton then said that the public deficit was likely to approach 2.6 percent of output when details for 2006 were published.

Villepin also said that he was "convinced" it was possible for France to reduce the burden of its debt to 55.0 percent of GDP from 2012.

Breton said that the debt would have fallen "below the level of 60 percent (of GDP) in 2010".

At the end of 2006, France had a debt equivalent to 64.6 percent of GDP, on the basis of data from the French finance ministry.

The debt ratio has risen in recent years in breach of eurozone rules stating that debt must be no greater than 60.0 percent of output or be falling consistently and structurally towards this ceiling.

A country's debt is the cumulation of past annual spending deficits.

Both the governing centre-right UMP government and the opposition Socialists have highlighted problems facing France over its public deficit and debt during campaigning for a presidential election at the end of April.

Villepin told a conference on public services that the debt "weighs heavily on buying power," constrained the "development of companies and therefore of pay" and tended to increase taxation.

He said that the government had made significant progress, reducing the public deficit to less than the EU and eurozone ceiling of 3.0 percent in 2005.

He said: "For 2007, we have set a target of 2.5 percent (for the deficit) which we can achieve. This is not just a random target. It is the level at which the debt ceases to grow."

Villepin said that the public debt should be used merely to finance investment. This was a "golden rule which the state must be able to respect in 2010" and should be written into the constitution eventually as was the case in Germany.

Copyright AFP

Subject: French news

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