PARIS (MNI) – The French government aims to trim the deficit in the
social security system by E1.7 billion next year to E21.4 billion,
Budget Minister Francois Baroin confirmed Tuesday.
Along with a E60 billion reduction in the central government
deficit, this will assure a decline in the overall public deficit from
nearly 7.8% of GDP this year to 6.0% in 2011 — an “historic advance,”
the minister told reporters.
Projected at E23.1 billion this year, the shortfall in the social
security system will be far below the alarming forecasts of a year ago
for a rise to E30.6 billion. Thanks to the early recovery in the labor
market, total employment revenues — from which the bulk of social
financing is drawn — should rise by 2% this year rather than decline by
another 0.4%, Baroin explained.
These windfall revenues will be flanked by a 0.1-point rise in
employer contributions, for a gain of E450 million, and reductions in
tax write-offs and incentives amounting to E7 billion.
On the social spending side, the government has targeted savings of
E2.4 billion, mainly by capping the annual rise in health care outlays
next year to 2.9% after +3.0% expected this year. The health care branch
would still post a shortfall of E11.6 billion, up from E11.4% this year.
The deficit in the pension branch is expected to decline from E8.6
billion to E6.9 billion — or from E12.9 billion to E10.7 billion, if
supplementary pension funds are included. The upcoming pension reform
aims to eliminate these deficits by 2018.
Excluding the pension system, next year’s social security shortfall
would still amount to E14.5 billion, which demonstrates the effort that
must be made in the years ahead to bring the social accounts into
balance, Baroin stressed.
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