PARIS (MNI) – Fiscal consolidation must go hand in hand with
measures to support economic growth in countries where such leeway
exists, French Finance Minister Francois Baroin said Monday.

Despite the criticism of Eurosceptics and the pressure of financial
markets, “we have solid reasons for delivering a message of confidence,”
Baroin told participants at a conference here, noting the “considerable
acceleration” in efforts to strengthen economic integration in the
Eurozone.

In overcoming the crisis, a fine line must be navigated “between
supporting the economy on the one hand and the necessary rebalancing of
our public finances on the other,” he said. “It’s not one or the other,
it’s one and the other — adapted to the particular situation of each
state.”

Echoing the words of Bank of France Governor Christian Noyer
earlier in the day, the minister reminded that French banks have
increased their capital bases considerably and are now able to deal with
whatever happens with Greece’s debt.

In addition, the G7 central bank leaders pledged this weekend that
they would assure price stability, support the economic recovery and
provide “as much liquidity for banks as needed,” he said.

With the approval in both houses of parliament last week of the EU
accord from July 21, France is the first member state to ratify not only
the second bailout plan for Greece but also the extended powers for the
European Financial Stability Facility, he noted.

Like other EMU countries, France must demonstrate full solidarity
with the bailout countries and adhere to the established timetable for
the reduction of its own deficit, he underscored.

Progress toward a joint economic government for the Eurozone could
one day lay the groundwork for the introduction of eurobonds, Baroin
said, but he warned that this would not be a quick fix for today’s
fiscal problems.

“Once fresh progress has be made in coordinating economic policy
and budget discipline, we could eventually envisage new instruments,
such as eurobonds,” the finance minister said, but he stressed that this
would be the “final stage” and not the “starting point.”

The G20 countries also have much work to do in the final months of
this year to fulfill the ambitious program laid out during the French
presidency, Baroin said. He cited the need to extend the regulation of
financial markets to include derivative markets for commodities, with
limits on the positions of traders.

–Paris newsroom +331 4271 5540; email: ssandelius@marketnews.com

[TOPICS: M$F$$$,M$X$$$,MGX$$$,MFX$$$,MI$$$$,M$Y$$$,M$$CR$]