The government has been warned. The governor of the Bank of France, François Villeroy de Galhau, asked the government on Friday to construct a budget for 2024 which demonstrates “more commitment and credibility”. “In the past, my country has not managed to respect its budgetary commitments,” noted the central banker during a speech in Santiago de Compostela (Spain), where the ministers of the Economy and Finance of the European Union.
“I sincerely hope that the next multi-year public finance programming law and the 2024 budget will demonstrate more commitment and credibility,” he continued.
Towards the end of “whatever it takes”
To reduce France’s heavy debt, the government indicated Thursday that it would present at the end of September a budget for 2024 which seals the gradual end of “whatever it costs” and identifies 16 billion euros in savings, essentially thanks to the planned end of the electricity tariff shield.
The executive aims to reduce the country’s debt from 111.8% of GDP in 2022 to 108.1% in 2027. The public deficit should increase from 4.8% of GDP in 2022 to 4.9% in 2023 then 4.4% in 2024 and 2.7% at the end of the five-year term, below the European objective of 3%.
Debt above 3,000 billion euros
In the first quarter of 2023, French debt had exceeded the symbolic threshold of 3,000 billion euros (114.8% of GDP) for the first time, having increased massively since the health crisis.
“At the same time as high inflation, public debts have reached historic levels due to unprecedented shock waves but also, for different countries, debts accumulated in the past,” underlined François Villeroy de Galhau. “Now that these shocks are fading, governments must avoid excessively expansionary positions that would further fuel inflationary pressures,” he added.