ANALYSIS AND BREAKING: France sinks deeper into debt

Date created : 28/06/2019 - 13:16  GMT/ZULU

Macron has turned out to be quite the spender AFP

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Paris 

by Natalie de Vallieres and Biodun Iginla, France24 Financial Analysts

France's has slipped further into the red, the national statistics bureau said on Friday, only days after the country's public auditor warned of "worrying" debt levels.

Public debt rose to 99.6 percent of gross domestic product in the first quarter of the year, the Insee bureau said, widening the gulf between the eurozone's 60 percent of GDP debt limit and the French reality.

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France is now 43.6 billion euros ($49.6 billion) deeper in hock than at the end of 2018, when the debt to GDP ratio stood at 98.4 percent.

President Emmanual Macron's government is targeting a ratio of 98.9 percent for the end of this year.

Insee said the rise in the public sector debt was mostly due to central government spending, with local authorities and the social security system adding much less to the debt mountain.

On Tuesday, France's public auditor warned that the country's debt level was "worrying" and urged the government to control spending.

France has been bucking the downward debt trend seen in most other eurozone countries after Macron loosened the country's purse strings to try end months of often violent "yellow vest" protests.

In a report, the Cour des Comptes said the growing divergence between France and its neighbours on debt reduction "could lead to a deterioration of the perceived quality of France's debt among investors".

It chided the government over its failure to take advantage of a spell of growth to significantly rein in overspending, which leads to increased borrowing every year.

The International Monetary Fund also warned last month that France's debt was "too high for comfort" and called on the government to cut spending.

Neighbour Italy is in the crosshairs of the EU Commission which has put Rome on notice about its snowballing debt, as well as its deteriorating deficit position, reopening a political battle with Rome.

Italy's debt ratio is, at 132 percent of GDP, much higher than that of France and the second-biggest in the eurozone after Greece.

Germany, the eurozone's biggest economy ahead of France, had a ratio of just over 60 percent at the end of last year.

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Eurozone says more debt relief for Greece 'impossible' for now

07 November 2016 - 21H45  GMT/UTC/ZULU TIME

by Isabelle Roussel and Biodun Iginla, France24, Brussels

 
 
 
 
• inShare

© AFP/File | Dutch Finance Minister and Eurogroup President Jeroen Dijsselbloem (L) and German Finance Minister Wolfgang Schaeuble, seen in March 2016, warned fresh debt relief for Greece by the end of the year would be impossible

BRUSSELS - 

Eurogroup head Jeroen Dijsselbloem and German Finance Minister Wolfgang Schaeuble, in a move likely to anger Athens and the IMF, warned Monday it would be impossible to draw up fresh debt relief for Greece by year's end.

Eurozone ministers have agreed in principle to a small measure of short-term debt relief for Greece, but powerful Germany, which holds elections next year, opposes any more promises before the end of the current bailout, at the end of 2018.

The 86-billion-euro ($95-billion) bailout programme, agreed amid much bitterness in July 2015, is set to end after three years.

"It is now 2016. It is impossible to be precise on what the size of the possible debt measures would have to be in the second half of 2018," Dijsselbloem, who is also Dutch finance minister, said after talks with his eurozone counterparts in Brussels.

It would be "complete nonsense" to advance new measures on debt relief, added Schaeuble, Germany's influential finance minister.

The resistance in Brussels will anger IMF head Christine Lagarde who had expected clear assurances on longer-term debt relief from the eurozone by the end of the year in order to sign on to the new bailout.

The IMF will "ask to see a clear political will on this question" at talks with eurozone ministers on December 5, said French Finance Minister Michel Sapin after the talks.

The Lagarde-led IMF was key to Greece's three bailouts.

But the fund says it won't give a penny to the latest one until it sees a concrete plan from the Europeans to cut Greece's massive debt burden, which it says is unsustainable.

Greek Prime Minister Alexis Tsipras has pushed through waves of unpopular financial reforms largely on a promise to win debt relief to help the economy.

"Even with full implementation of this demanding policy agenda, Greece requires substantial debt relief calibrated on credible fiscal and growth targets," the IMF said in a report in September.

Tsipras last week reshuffled his government with the aim at helping push through even further reforms.

The 42-year-old was elected in 2015 on a pledge to tear up prior austerity agreements, but was forced to reverse course and signed up for additional fiscal cuts in return for the 86-billion-euro loan agreement.

 

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Greece bailout: Eurozone agrees 'breakthrough' debt deal

• 1 hour ago
 
• From the sectionEurope

Image copyrightAFP

Image captionThe Brussels talks between Eurozone ministers lasted well into the night

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by  Isabelle Roussel and Biodun Iginla, BBC News, Brussels

Eurozone finance ministers have agreed to extend further bailout loans to Greece as well as debt relief, in what they call a "major breakthrough".

After late-night talks in Brussels, the ministers agreed to unlock 10.3bn euros ($11.5bn; £7.8bn) in new loans.

The move came two days after the Greek parliamentapproved another round of spending cuts and tax increases demanded by international creditors.

The ministers also said debt relief would be eventually offered to Greece.

This had been a key demand from the International Monetary Fund (IMF), which says public debt is unsustainable at current levels of about 180% of Greece's gross domestic product.

The deal was announced after 11 hours of talks between the 19 eurozone ministers - known as the Eurogroup.

"We achieved a major breakthrough on Greece which enables us to enter a new phase in the Greek financial assistance programme," Eurogroup President Jeroen Dijsselbloem told reporters early on Wednesday.

He said a package of debt measures would be "phased in progressively", adding that he was "glad to confirm" the IMF would now stay on board.

Image copyrightAFP

Image captionThere were protesters outside Greece's parliament as it approved the austerity budget on Sunday

Poul M Thomsen, director of the IMF's European Department, welcomed the recognition that Greek debt was unsustainable and relief was needed.

He warned, however, that the IMF board in Washington still had to agree to the fund's participation. He also said that the extent of debt relief was still not clear.

The IMF and the Eurogroup have been at odds for months over the issue of reducing Greece's debt.

The Greek parliament passed new budget cuts and tax rises at the weekend, in order to unblock much-needed aid to help meet the country's debt repayments over the coming months.

The bill also created a state privatisation fund requested by eurozone finance ministers.

Opponents of the measures demonstrated outside parliament on Sunday.

The government, led by the leftist Syriza coalition, agreed to a third bailout worth €86bn (£67bn; $96bn) last year.

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