The Senate Finance Committee announced on Wednesday, March 27th, the launch of a parliamentary mission to investigate the deterioration of the public deficit and the lack of information provided to Parliament regarding the situation. The public deficit for 2023 ended up being 5.5% of the gross domestic product (GDP), totaling 154 billion euros, according to data published by INSEE, responsible for measuring it in France. This figure is significantly higher than the 4.9% projected in the 2024 budget law passed at the end of the year. In light of this, the Senate plans to investigate this situation through a “flash” mission, aiming to shed light on the deterioration of public finances since 2023 and its monitoring by the administration and government.
Led by an opposition alliance of right and center parties, the Senate had already conducted oversight missions recently through document verification at the Ministry of Finance by the budget rapporteur, Jean-François Husson. He will be the rapporteur for the newly launched “flash” mission, which will be chaired by socialist Claude Raynal, who also heads the finance committee. Following a visit to the Ministry of Economy and based on internal notes, Husson raised concerns about a “withholding of information” by the government, which he believes had long been aware of the impending deficit increase. According to Husson, Bercy’s services estimated in mid-February that the gap to be filled in order to comply with the public finance programming law was not 10 billion euros, as initially planned by the government, but 30 billion euros.
Many uncertainties remain, such as when was this deterioration known and certain enough to justify informing the national representation and taking action by the government? How can such a gap be explained? What impact can be expected on 2024 and the public finance programming law, which had just recently come into effect? The Senate emphasizes that only a clear, objective, and sincere assessment of the situation can lead to appropriate responses. Moody’s, a credit rating agency, also expressed doubts about France meeting its target of reducing the public deficit to 2.7% by 2027. Moody’s additionally deemed the additional 10 billion euros in savings for 2024 inadequate to put the government back on the planned budgetary trajectory.
Despite the French deficit overshooting, there has been no financial market tension so far. The Senate’s mission aims to provide a comprehensive understanding of the situation and the factors leading to the current state of public finances. The ongoing debate and scrutiny surrounding the deficit issue highlight the challenges faced by the government in maintaining fiscal discipline and adhering to budgetary targets. The involvement of parliamentary committees and agencies like Moody’s reflects the ongoing concerns and uncertainties in the economic and financial landscape of the country. The findings and conclusions of the Senate’s mission could potentially impact future financial policies and decisions, providing valuable insights for the government and policymakers.
