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France's finances 'critical'
26/09/2007 08:03 - (SA)
Paris - President Nicolas Sarkozy's government on Wednesday unveils its 2008 draft budget, as France faces mounting pressure from its European partners over the worsening state of its public finances.
Sarkozy's presidency has hit its first choppy waters in recent weeks, with his government facing the tricky task of balancing generous election promises with the state of the public coffers.
The 2008 budget is expected to show a deficit of €41.5bn, while national debt, at €1.150bn, soars well above the European Union ceiling of 60% of gross domestic product.
The government's 2008 social security budget, presented on Monday separately from the general budget, included a deficit of €8.9bn.
Prime Minister Francois Fillon warned on Monday the country's finances were in a "critical" state, three days after he sparked an angry debate by warning that France was in a "situation of bankruptcy".
His tough talk won support from Jean-Claude Trichet, head of the European Central Bank, who said he was right to sound the alarm.
Sarkozy this week unveiled plans to overhaul pensions for some public employees and to streamline the civil service, the boldest moves yet in his reform agenda since taking office four months ago.
But opposition Socialists say the public finances have been aggravated by Sarkozy's tax cuts, voted through after his May election and estimated to cost between €11bn and €16bn a year.
The French government continues to bank on a growth figure of 2.25% for 2007, while the Organisation for Economic Co-operation and Development sees momentum limited to 1.8%.
Meanwhile, some voices within the ruling centre-right are calling openly for austerity measures as the only cure for France's public finances - an option currently rejected outright by the presidency.
- AFP
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