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UPDATE 1-France says EU stimulus package may top 130 bln euros

Published 11/26/2008, 03:31 AM
Updated 11/26/2008, 03:34 AM
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PARIS, Nov 26 (Reuters) - The European Union stimulus plan to be unveiled later on Wednesday may amount to more than the expected 130 billion euros ($168.9 billion), French Economy Minister Christine Lagarde said.

The European Commission is due to announce details of the measures, foreseen for a maximum period of two years, after a meeting later on Wednesday when the total volume of the package will be decided.

Germany and France pushing for a target of one percent of the bloc's total gross domestic product (GDP), or some 130 billion euros but Lagarde said the package may even be larger.

"The figures were still being decided last night," she told France Info radio. "It may be a bit more than that."

"We absolutely have to continue repriming the finance pump," she said, though she added that the programme would have to be carefully targeted and limited in duration to ensure governments could keep control over public finances.

"The measures have to be targeted so that after the two years, when we have got out of the crisis period, we can get back to the principles of managing public finances, controlling and reducing deficits, reducing public debt," she said.

Lagarde said further rate cuts by the European Central Bank would be welcome to complement the package.

"It has already cut them several times as we had wished and as we had been asking for at least a year," she told LCI television in a separate interview.

"Another effort...would be very good," she said. "Prices are going down at the moment and the real imperative is growth and we know monetary policy can be an efficient weapon."

"It's not the only one and it may not be the best one in the current period but it's one of the weapons and we aren't in a position not to use it," she said. (Reporting by James Mackenzie; editing by Patrick Graham)

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