France maintains its public deficit reduction targets – The World

Le Monde | 13/04/2016 at 9:09 • Updated 13/04/2016 at 09h49 | By Patrick Roger

the change is the continuity. This is somehow characterizes the stability program presented Wednesday, April 13 in the Council of Ministers. This annual document, to be transmitted to the European Commission before the end of the month, establishes the macroeconomic strategy of France until 2019. There will be a debate without a vote on 26 April in the Assembly national and the next day the Senate.

the first indication provided by the stability program is that France maintains its growth targets and reducing the public deficit. “The growth has settled on a solid foundation,” says Michel Sapin, Minister of Finance. While the Finance Act provided 1% in 2015, it finally reached 1.2%. The Government maintains its forecast of 1.5% in 2016 and 2017. For 2018 and 2019, respectively, is expected at 1.75% and 1.9%. A forecast, with regard to 2016, the High Council of Public Finance, in its opinion released Wednesday, Justice “attainable” , even if it is in the upper range of economic forecasts . For subsequent years, the Government of scenario appears to him “plausible” but notes “the importance of the risks that affect” .

for its part, the Bank of France expects 1.4% over the year. “The growth in France in 2016 is expected to show strong, that is to say at least at the level of last year, while remaining insufficient . We will be below the average of the euro area “, said on Tuesday the governor of the monetary institution, François Villeroy de Galhau. However, the french economic Observatory is more optimistic in its outlook released Tuesday as forecasts 1.6% in 2016 and 2017.

credit movements between departments

it’s the same stability that prevails regarding the reduction path of the public deficit from 3.5% of GDP in 2015, against 3.8% expected it should, according to the maintained assumptions of government reach 3.3% in 2016 before returning in the famous 3% mark in 2017, as France has promised to Brussels, and be lowered to 2.7%. “We are committed to it, we will keep says Mr. Sapin. The results last two years show that our method works. “

The government denies wanting to open the floodgates of public spending and leave derive the deficit, despite successive announcements since the beginning of the year: the employment plan launched in January have joined the emergency plan for farmers, the revaluation of index point and careers of officials and the measures proposed Monday for young people. The stability program sets a target of growth of public expenditure, excluding tax credit, 1.1% in 2016 and 2017. This translates into a decline in the share of spending in GDP, which after have been reduced from 56.1% in 2014 to 55.3% in 2015, should rise to 54.6% in 2016 and 54% in 2017.

“Any new expenditure will be funded says Christian Eckert, the Secretary of State for the budget. What we managed last year, we will also pass on this year. “ To do this, Bercy, on the one hand has an increased precautionary reserves of 1.8 billion euros thanks to the freezing of appropriations carried over from 2015 to 2016 and, secondly, will conduct funds transfers between departments during the spring.

A record rate of 0.43%

Most importantly, it will take, as in 2015, Additional savings measures, amounting to 3.8 billion euros to absorb in particular the negative impact of low inflation on public finances. In its document, in fact, Bercy notes the absence of renewed inflation and lowered its inflation forecast of 1% to 0.1%.

Therefore, after funding new measures, the State and its operators will have to reduce their spending 1 billion euros. The same amount of savings will be realized on the expenditure of social security funds. Finally, 1.8 billion euros in savings will be achieved through the least interest burden of debt. Even if public debt continues to rise slightly in 2016 (96.2% of GDP) and 2017 (96.5%) after 95.7% in 2015, the monetary policy of the European Central Bank keeps the low interest rates. France has taken ten years Thursday at a record rate of 0.43%. While the Finance Act was established on an interest rate forecast of 2.4% in late 2016, it was lowered to 1.25%, before rising to 2% in 2017.

in 2017, it was 5 billion euros of additional savings that will be achieved, while at the same time, the downward movement of the tax burden initiated in 2015 should continue. The government reduced its forecast from 44.5% to 44.2% in 2016 and 44% in 2017. France thus account this time pass without incident review of the European Commission.