PARIS, Sept 28: France presented on Wednesday a budget for 2006 based on economic growth of 2.25 per cent, a budget deficit just within EU limits and an oil price of $60 a barrel.
But the public debt and the total amount of national output swallowed up by taxes and charges would both rise.
Having presented the package to the cabinet earlier in the day, Finance and Economy Minister Thierry Breton told a press conference the budget was built around four key ideas: growth, reducing the public deficit, debt stabilization and fiscal reform.
Defending his growth forecast as “logical and realistic”, Breton predicted: “French growth in 2006 will be between 2.0 and 2.5 per cent. It’s my range and I stand by it on behalf of the entire government.”
Breton also insisted that the public deficit would be maintained at 2.9 per cent of gross domestic product, just inside the European Union and eurozone ceiling of 3.0 per cent but higher than the target of 2.7 per cent given by the government only a few months ago.
In addition, “France’s public debt will at last stabilize in 2006” at 66 per cent of GDP, marking “the beginning of debt reduction” for the country, Breton said.
Looking ahead to 2007, the government would aim to reduce public debt to 65 per cent of GDP from the 66 per cent forecast for 2006, the minister said.
Public spending would also be reigned in to represent a “zero value” increase, meaning that no more would be spent than in 2006 once inflation had been taken into account.
The fiscal reforms most urgently needed, according to the minister, have been decided and will take effect from 2007, providing a “vital fiscal competitivity for the future of our country and our jobs”.
“France no longer lives in a bubble, and can no longer permit itself to live in one,” he warned.
In a copy of his speech to the National Assembly Breton said that he stood by a growth target of 1.5-2.0 percent for 2005. “Nearly all studies point towards a rebound of activity ... the French economy has emerged from the slowdown”.
As for the public deficit, France expects it to be 3.0 per cent of output this year, exactly on the EU ceiling and the first time that it would not have overshot since 2001.—AFP
