France to trim 2015 budget deficit by US$4.7b

[PARIS] The French government plans to cut its budget deficit by an additional US$4.6 billion to US$4.7 billion next year, Finance Minister Michel Sapin said on Monday, adding that this should allow Paris to respect EU-deficit rules.

Sapin updated the government's 2015 budget plans in a letter to the European Commission, a copy of which Reuters obtained. The Commission has until Wednesday to decide whether to reject France's 2015 draft budget for overshooting EU-agreed deficit limits.

The minister said additional resources come from lower- than-expected costs on interest payments and contributions to the European Union's budget as well as additional revenues from cracking down on tax fraud and ending a range of tax deductions some companies have been able to benefit from.

Together the cost-savings and extra measures should allow France to reduce its structural deficit, which excludes the impact of business cycle and is closely watched in Brussels, by more than 0.5 percentage points of GDP, Mr Sapin said. "France is presenting precisions and elements that will allow us to stay on track, using the flexibility that is necessary in the current deteriorated economic situation," Mr Sapin told news agencies.

President Francois Hollande had said on Friday that France was already taking all necessary measures to cut the deficit, citing in particular plans to squeeze an unprecedented 21 billion euros(S$33.98 billion) in savings from the budget next year.

But while France had so far been able to able to count on Rome to stand up with Paris to pressure for more action on their deficits, the Italian government said earlier on Monday it would take additional measures worth some 4.5 billion euros to ensure it meets EU budget requirements next year.

REUTERS