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Fri, Jul 18, 2003 - Page 12 News List

France's finance minister promises to control deficit

AFP , FRANKFURT

France will do everything possible to bring its public deficit back within EU limits next year, but that will be "very difficult," France's Finance Minister Francis Mer warned in a German newspaper interview on Thursday.

"I told my colleagues [fellow European finance ministers] that I will do my utmost to keep to the limits laid down in the stability pact," Mer told the business daily Handelsblatt.

"But given the current economic weakness, that will be very difficult," he added, in comments translated into German.

The European Stability and Growth Pact sets tight limits on the public finances of countries participating in the single currency, banning member states from running up public deficits in excess of 3.0 percent of GDP.

But both France and Germany failed to obey that rule last year and both countries' deficit ratios look likely to exceed the 3.0-percent ceiling not only this year, but possibly next year as well, given the extended economic slump.

German Chancellor Gerhard Schroeder on Wednesday had said that the pact, by its very name, was aimed not only at fostering stability but also at stimulating growth as well.

Mer took a similar tack.

The stability pact had already achieved its goal regarding price stability, with inflation in the single currency area presently under control, the minister told the Handelsblatt.

By contrast, "there has not been sufficient reflection regarding the formulation of its second goal of growth," Mer said.

The Frenchman called on the smaller euro-zone countries, which have been able to get their finances in order, to be more generous in their criticism of the perceived budget sinners, France and Germany.

"The smaller states know that their growth depends on the big countries," Mer said.

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