PARIS Dec 26 France should worry more about the
credibility of its efforts to cut back on flab in public
finances than whether or not it meets the EU's 3 percent of GDP
target for the budget deficit immediately, the IMF's mission
chief said on Wednesday.
The comments are the latest sign that France, hanging on
grimly to the last of its top AAA credit ratings, may need - and
could receive - some leeway on targets that are threatened by
poor growth rates across the euro zone.
The International Monetary Fund forecast this month that
France would miss its 2013 target for a deficit of 3 percent of
gross domestic product, estimating the shortfall would come in
at 3.5 percent due to weaker-than-expected growth.
EU Economic and Monetary Affairs Commissioner Olli Rehn said
last week that France did not need additional savings measures
and opened the door to "softer adjustment".
Spanish newspaper El Pais reported on Saturday that the
European Commission would propose Spain, France and several
other euro zone states more time to cut their public deficits
below the target limit of 3 percent of GDP.
Edward Gardner said that in order to respect the 3 percent
target the Socialist government would have to carry out even
more belt-tightening than already planned, which would weigh on
growth that already was likely to be subdued.
"Our recommendation is that France discuss the fact in a
broader European context (about what would be) the appropriate
stance for 2013," Gardner said in a conference call with
Eager to forge his fiscal credibility, President Francois
Hollande already aims to carry out a belt-tightening effort that
is unprecedented in modern France in order to reach the deficit
"The importance is really the credibility of the medium-term
orientation of policies," Gardner said.
"Whether it's 3 or 3.5 percent next year matters less to the
extent that France can give reasonable credible assurances about
the direction of policies," he added.