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France to reduce budget deficit by 2011-12 -Lagarde

Published 12/05/2008, 03:17 AM
Updated 12/05/2008, 03:20 AM

PARIS, Dec 5 (Reuters) - The strain on French public finances inflicted by a 26 billion euro ($33 billion) stimulus package will be limited in time and the budget deficit will be back under control by 2012, Economy Minister Christine Lagarde said on Friday.

The stimulus package announced by President Nicolas Sarkozy on Thursday will push the deficit up to 3.9 percent of Gross Domestic Product (GDP) in 2009, well above the European Union's 3 percent limit.

Lagarde said on RTL radio that the increase was necessary to make the stimulus package possible, but the government's intention was not to let public finances slip indefinitely.

"This deficit will mostly impact the year 2009 and a little bit the year 2010," she said.

"As we're bringing forward projects, we will actually reduce the deficits that were planned for 2011 and 2012. So our trajectory will bring us to the right point in 2012.

The government had previously promised to balance the budget by 2012 but has abandoned that objective because of the economic slowdown that grew out of the financial crisis. (Reporting by Estelle Shirbon; editing by David Stamp)

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