French public debt to hit 83.7 percent of GDP: government

30th June 2010, Comments 0 comments

France's public debt is expected to come to 83.7 percent of gross domestic product this year, the government said Tuesday, well beyond the 60 percent level prescribed by the eurozone.

The government, in an upward revision of its previous 2010 forecast of 83.2 percent, predicted that the public debt would expand to 87.5 percent of output in 2012.

Earlier Wednesday the national statistics body INSEE said French public debt had risen sharply in the first quarter of the year to 80.3 percent of GDP.

It said in a first estimate that at the end of March the public sector debt rose by 46.5 billion euros (56.7 billion dollars) from the figure for the previous quarter to 1.535 trillion euros.

The government on Wednesday also maintained a commitment to reducing the public deficit from 8.0 percent of output in 2010 to 6.0 percent next year, 4.6 percent in 2012 and 3.0 percent -- the eurozone-stipulated limit -- in 2013.

The government starting next year hopes to save 8.5 billion euros (10.4 billion dollars) through the closure of tax and social welfare loopholes.

In another developement Fitch Solutions said Wednesday that the cost of insuring French public debt against default last week approached a level of a country with an AA-plus rating rather than AAA, France's current rating.

The cost, as measured by credit default swaps, on Tuesday came to 0.975 percent, close to its high of 0.999 percent in early June.

That meant that to insure 10 million dollars in French debt over five years would cost about 97,500 dollars a year.

© 2010 AFP

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