France: Court of Auditors calls for debt control "over time"

Pierre Moscovici, first president of the Court of Auditors, June 30, 2020. AFP

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In France, the Court of Auditors said it was worried about an uncontrolled debt and called for an effort "over time". Pierre Moscovici, the first president of the institution insisted on "seriousness ..., predictability, in no case austerity".


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At a press conference on June 30, the first president of the Court of Auditors,  Pierre Moscovici, presented the latest report on the situation and prospects of public finances in France and in particular on the consequences of the major global crisis that was the Covid-19 epidemic.

The Court of Auditors alerts the government to the need for an effort "  over time  " to control public debt. It considers that "  without recovery action, the deficit is likely to be very high in the long term  ".

The government expects a historic recession of -11% this year, before a rebound in the economy next year. But the Court of Auditors warns the latter and encourages him not to "  wait for everything  " from growth, because even the most optimistic scenario of a rapid recovery will not allow France to regain its debt level before the crisis by 2030. 

The institution thus calls on the government to define a debt reduction trajectory in the future public finance programming law "  at the latest  " next spring. "  There is no need to wait,  " said Pierre Moscovici.

The isolated  “ Covid-19 debt

France, like all the other countries in the world, has gone into debt very heavily to cope with the coronavirus. The government intends to isolate this debt, to treat it apart in a way. This was announced on Monday, June 29, the Minister of the Economy, Bruno le Maire, before the National Assembly, when examining a new crisis budget.

In 2020, the government is now counting on public debt reaching 120.9% of GDP. One hundred points of "initial debt", according to the detail given by the Minister of the Economy Bruno Le Maire, and a little more than 20 points, therefore, of "Covid debt", Or about 150 billion euros. Additional debt created by massive aid to the economy: partial unemployment, guaranteed loans and support plans.

These 20 points, "  confined  " apart, according to official terminology, will not be funded by an increase in taxes, a promise made by President Emmanuel Macron during his last televised speech, but by activity. The government has given itself “  twenty years  ” to achieve this.

Isolating this exceptional debt is therefore a way of giving yourself more time to honor it, and also of devoting specific resources to it. No details have yet been given, but the newspaper Les Echos mentions a possible further extension of the CRDS. A tax therefore, but which mainly concerns income from activity. The CRDS was to disappear in 2024; it was already extended last month for nine years in order to finance the “social debt”, stemming from health expenditure, which is also obviously created by the coronavirus.

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