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French gov't maintains 2017 growth, deficit targets

Xinhua, September 29, 2016 Adjust font size:

French Finance Minister Michel Sapin on Wednesday unveiled the 2017 draft budget, in which the government held pledges to accelerate growth by 1.5 percent and to lower the budget gap by 6 percentage points to 2.7 percent.

The financial road map is a "serious effort to manage public finances," according to Sapin."This effort must be pursued because it's a condition of France's credibility and a guarantee of our sovereignty," he added.

Long under pressure to honor fiscal commitment, France aims to achieve a budget deficit of 3.3 percent of GDP this year before achieving the EU-mandated threshold at 2.7 percent of GDP or 69.3 billion euros (77.65 billion U.S. dollars).

"This commitment, we will hold. What is unlikely today will be proved possible tomorrow," the French minister added.

According to the 2017 budget draft, the French economy is expected to grow by 1.5 percent in 2016 and 2017, up from 1.3 percent recorded in 2015.

For next year, the government will increase public spending by 7 billion euros after pumping more to improve youth training, boost security and recruit more teachers.

France's total accumulated debt would be stabilized at 96 percent of GDP.

"It's true that a forecast can always be discussed. But to date, we have been consistent with the commitments we made," said government spokesman Stephane Le Foll.

"So, we continue to defend the growth outlook which is credible and serious," he added after a weekly cabinet meeting.

On Tuesday, the High Council of Public Finance (HCFP), the country's independent fiscal watchdog, said France's growth and deficit targets were "improbable," blaming higher spending which may hamper efforts to reach healthy finances.

COE-Rexecode institute of economic research painted a grim picture of the French economy next year, saying that the government failed to transform a favorable climate business in 2016 to a lasting recovery.

"Given a change in macroeconomic climate, modest intrinsic dynamics of the French economy and increasing drain on imports, we estimate a downturn in 2017," the institute said in a note. Endit