PARIS (MNI) – France’s central government deficit at the end of
April amounted to E59.9 billion, down E1.5 billion from the
previous-year shortfall, the Budget Ministry said Friday.

Outlays for the first four months of the year totaled E133.6
billion, E5.4 billion or 4.2% more than a year ago. This was mainly due
to a new financial management system that allowed ministries to hit the
ground running at the start of the year, the ministry explained.

Revenues through April were E2.1 billion or 2.7% higher at E90.664
billion, due principally to gains in income and value-added taxes. The
one-off sale of new airways frequencies at the start of the year also
contributed. Thanks to the dynamism of the VAT and income tax receipts,
total tax revenues were up E1.6 billion or +1.9% on the year, in line
with budget projections, the ministry said.

The full-year deficit target of the outgoing government was E78.7
billion plus a contribution of more than E6 billion to the EFSF bailout
fund. The overall public deficit ratio was to be trimmed by 0.8 point of
GDP to 4.4%.

President Francois Hollande has targeted a public deficit of 4.5%
this year and pledged to stick to next year’s goal of 3%, warning that
“efforts” will be demanded. He has asked the Accounting Court to come up
with an audit to determine the current state of public finances. The
results are to be presented after the parliamentary elections and will
determine the extent of consolidation measures that lie ahead.

Finance Minister Pierre Moscovici estimated this week that the
deficit was heading towards 5% this year and 4.2% next year “if nothing
is done” to correct the trajectory. This implies that some E10 billion
in savings or additional revenues will be needed this year alone.

Most of the tax hikes Hollande has planned, notably for higher
incomes, will not take effect until next year. In the meantime, a
mini-budget foreseen for next month could bring an exceptional surtax on
wealth and higher inheritance taxes, according to the business daily Les
Echos. Other measures on the drawing board include a cap on corporate
tax reductions and a tap on banking and oil sector profits.

–Paris newsroom +331 4271 5540; Email: paris@marketnews.com.

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