The governor of the Bank of France welcomed on Tuesday the update of the government’s stability program and called on it to ensure its implementation “in a credible manner”, so that the public deficit falls well below 3% of GDP in 2027.
The French government was right to present an updated stability program last week, providing for a reduction in deficits to 5.1% this year and less than 3% in 2027, welcomed Franois Villeroy de Galhau during a speech in New York.
Initially, the executive expected a public deficit of 4.4% of GDP in 2024, but its unexpected drop to 5.5% in 2023 – instead of 4.9% initially planned – made the objective difficult to achieve. The objective of a deficit of less than 3% in 2027, demanded by Brussels, was however retained.
The government was right to update its Stability program, but it is now a matter of specifying its content and ensuring its implementation in a credible manner, warned François Villeroy de Galhau.
At the end of March, the governor castigated successive governments which for fifteen years have not kept their multi-year commitments to restore public accounts, calling for serious attention to spending at last.
To stay on target with a 5.1% deficit in 2024, ten billion additional euros will have to be found in 2024, Bercy warned last week, which had already passed ten billion euros in budget cuts by decree in February. – the maximum authorized without going through a draft amending finance law (PLFR).
The main avenues mentioned are: an additional effort of around 5 billion euros from state administrations (sales of real estate, reform of the CPF, etc.) and an effort by local authorities so that the increase in their operating expenses remains confined 0.5 points below inflation.
Added to this is a possible taxation of rents, which could target the super profits of energy companies or share buybacks, and on which four parliamentarians are working.
According to Bercy, part of the new 10 billion to be saved will have to be regulated at the legislative level, via end-of-year financial texts and in complete transparency with regard to Parliament.
The stability program will be presented to him on Wednesday in the Council of Ministers, then debated in Parliament and transmitted to Brussels.