French Finance Minister Bruno Le Maire speaks in Buc, France, on March 11.JULIEN DE ROSA/Getty Images
France is at risk of missing its deficit reduction target this year due to overly optimistic tax expectations and more budget cuts may be necessary, the public audit office said on Tuesday.
The government aims to reduce the public sector budget deficit to 4.4 per cent of economic output this year and last month announced an extra €10-billion in cuts to reach the target due to weaker than expected growth.
The independent Cour des Comptes audit office said in an annual report that the new cuts might still not be enough, urging the government to detail another round of savings.
“The 2024 deficit forecast is optimistic, and even difficult to reach given the still too favourable forecasts for revenue growth,” the report said.
Finance Minister Bruno Le Maire said last week that when the 2023 accounts are finalized, last year’s budget deficit would be “significantly above” the government’s target of 4.9 per cent of GDP due to weaker than expected tax revenue.
The audit office said that the government should revise down its tax revenue expectations, especially given the 2024 economic growth estimate was cut last month to 1 per cent from 1.4 per cent previously.
Although the government has already come up with the €10-billion in cuts barely two months into its fiscal year, their impact on the budget has been dulled by measures to help protesting farmers and extra support for Ukraine.
Le Maire has said that new legislation might be needed mid-year to update the 2024 budget, setting the stage for a possible second round of cuts just after EU parliamentary elections in June.
President Emmanuel Macron’s government aims to cut the deficit to less than an EU ceiling of 3 per cent of GDP by 2027, when his five-year term ends.