PARIS, Sept 26: President Nicolas Sarkozy’s government on Wednesday unveils its first budget since taking office, with state spending under scrutiny after the prime minister warned that France was bankrupt.Prime Minister Francois Fillon caused a stir last week when he said the nation was “in a situation of bankruptcy” after decades of accumulated budget deficits and called for a change in mindset.

The budget to be presented at a cabinet meeting will show a deficit of 41.5 billion euros ($8.5 billion) — about at the same level as last year’s hole.

The national debt meanwhile will reach 1.150 trillion euros representing 64.2 per cent of France’s gross domestic product (GDP), up from 63.7 per cent.

Despite the dire state of public finances, Sarkozy dismissed suggestion that the nation was headed toward a belt-tightening austerity plan and said economic growth was key to filling state coffers again.

“I have committed myself to getting public finances under control in France and I will do it,” Sarkozy said in New York on Tuesday where he attended a session of the UN General Assembly.

“There will be no austerity plan,” he added. “France’s economic problem is very simple: we have discouraged hard work and we must encourage it (...) to gain growth.” The French government continues to bank on a growth figure of 2.25 per cent for 2007 but projections from the European Commission and the Organisation for Economic Cooperation and Development show it will climax at 1.8 or 1.9 per cent.—AFP