After soaring in 2020 due to the health crisis, the public debt ratio had begun to decline slightly in 2021 thanks to a rebound in growth, reaching 112.8% of gross domestic product (GDP).

For 2022, the government is counting on a further decline, to 111.6%, while the public deficit is due to be reduced to 5% of GDP, against 6.5% in 2021, against a backdrop of slowing growth to 2.6% last year.

According to the newspaper Les Echos, the public deficit should finally reach 4.8% of the GDP, "or even less", better than the official target, while the public debt would not exceed the unprecedented threshold of 3,000 billion euros.

The Ministry of Economy and Finance has not confirmed these figures.

In any case, these levels remain well above those that prevailed before the health and energy crises, when debt reached less than 100% of GDP and the public deficit stood at 3% of GDP in 2019.

Short-time working, guaranteed loans to companies, exceptional cheques, rebates at the pump... With the "whatever it takes", the State has indeed spent lavishly to protect households and businesses from the shock of the pandemic and the consequences of the war in Ukraine, including galloping inflation.

Record or not, this soaring debt weighs on public finances by considerably increasing the debt burden.

"The annual cost of interest on the loan is the second largest budget item of the State" behind the National Education, warns Lisa Thomas-Darbois, head of the economy and action of the State at the Montaigne Institute.

'Several billion in savings'

The bill is all the more salty as the interest rates at which the State borrows on the markets have risen sharply with inflation. And to make matters worse, a tenth of French debt is indexed to inflation, which increases its cost.

The burden of public borrowing has increased by 13 billion euros in one year, to more than 51 billion in 2022, while French 10-year bond yields have rebounded sharply around 3% after years of very low or even negative rates.

More than an absolute figure, it is above all the evolution of the debt-to-GDP ratio that is particularly scrutinized on the markets.

At this stage, investors are not worried. French debt is considered a safe asset and the difference ("spread") with Germany's interest rates, which is a benchmark in the EU, has not widened significantly.

To restore public finances, the government is mainly counting on an increase in GDP faster than that of spending, which would be the subject of "several billion euros in savings" in the draft finance (PLF) 2024, according to the Minister of Economy and Finance Bruno Le Maire.

Growth is expected by the executive at 1% in 2023, a forecast higher than that of the Bank of France, the OECD or the International Monetary Fund (IMF).

However, the Court of Auditors sounded the alarm in early March, expressing concern about the government's slowness in restoring public finances.

She estimated that the deficit would be absorbed too late, falling below the European limit of 3% of GDP only in 2027, while the debt would remain more or less at its current level, at 110.9%. The financial magistrates had even pointed out the risk that it would widen.

"We assume that we must restore our public finances and we assume not to do it in a brutal way," retorted the Minister in charge of Public Accounts, Gabriel Attal, which would give "more unemployment, more taxes and more debt".

The government plans to present its new stability programme in mid-April, setting out the path of public finances for the coming years.

© 2023 AFP