The High Council of Public Finances (HCFP), an independent budgetary institution of the government and parliament, has publicly criticized the government’s trajectory to control the public deficit for lack of credibility and coherence. The government’s stability program, presented to the council of ministers, reveals its growth forecasts and financial trajectory for the coming years. The plan aims to bring the public deficit back below 3% of the Gross Domestic Product (GDP) by 2027, but also acknowledges the country’s deteriorating finances, with a deficit projected at 5.1% of GDP for the current year.
Despite the government claiming that the plan is ambitious but credible, experts note that achieving a deficit below 3% of GDP in three years would require a massive structural adjustment between 2023 and 2027, mainly through spending cuts. The HCFP doubts the credibility of this forecast, as such a tightening of the budget has never been achieved before and lacks a clear plan for implementation. The experts also question the coherence of the plan, as the announced efforts are expected to have a negative impact on economic activity, especially in the short term.
The HCFP emphasizes the need for rigorous governance involving all relevant stakeholders (the state, local authorities, and social security) to implement the necessary adjustments, which is currently lacking. The experts point out that the government’s high growth forecasts are inconsistent with the magnitude of the planned budget adjustments. For example, the government predicts 1% growth in 2024, while most international economic organizations only project a growth rate of 0.4% to 0.9% for the country. The HCFP’s assessment highlights the challenges and risks associated with the government’s strategy to control the public deficit.
The record-high level of debt in France further complicates the situation, making it even harder to achieve the necessary fiscal adjustments. The HCFP warns that the government’s current trajectory could lead to increased economic instability and challenges in meeting its deficit reduction targets. The lack of a detailed and comprehensive plan for budget adjustments raises concerns among experts and investors about the government’s ability to effectively manage the country’s finances and ensure long-term economic stability.
The government’s stability program is set to be transmitted to the European Commission, which will scrutinize France’s fiscal plans and adherence to EU budget rules. The lack of credibility and coherence in the government’s trajectory for controlling the public deficit raises doubts about France’s ability to meet its budget commitments and maintain financial stability. The HCFP’s assessment serves as a warning about the challenges ahead and the urgency of implementing effective measures to address the country’s fiscal situation. The government will need to reassess its strategy and work towards building a more sustainable and resilient financial framework to safeguard France’s economic future.
