French Finance Minister Antoine Armand has assured European partners and markets that the government will present a budget this week that adheres to EU fiscal rules, Bloomberg reports.
The announcement comes amid concerns about France’s ballooning deficit and the government’s recent push to extend the timeline for achieving the EU’s 3% deficit limit.
Armand is set to present the new administration’s policy priorities at a meeting of euro-area finance chiefs in Luxembourg on Monday, a customary practice following a change in government.
“It’s a budget that will be fully in line with new European fiscal rules that France contributed to,” Armand stated in a briefing with journalists.
France’s finances have been under scrutiny following the government’s acknowledgment of delays in meeting the EU’s 3% deficit limit. The current government, which took office last month after snap elections in July, has announced a revised target of 2029, instead of the previous administration’s goal of 2027.
To achieve this revised target, the government plans to implement €60 billion in spending cuts and tax increases next year, aiming to bring the deficit down to 5% of economic output from the projected 6.1% in 2024.
These budget plans represent a first test of the new EU rules, which aim to tailor fiscal adjustments to individual member states. These rules allow for extended deadlines for deficit reduction if countries present comprehensive long-term reform plans.
“We haven’t done the budget for the EU rules, we have done the budget to strengthen the financial and national sovereignty of the country,” Armand clarified. “But it turns out that respecting the commitments we ourselves formulated and inspired is a question of international credibility and sovereignty.”
