French cabinet approves plan to reach EU deficit targets

PARIS: French President Francois Hollande's government approved plans on Wednesday to bring the public deficit into line with EU limits by the end of next year, though the programme was based on growth forecasts deemed optimistic by independent experts.

In a multi-year fiscal programme to be submitted to the European Commission, France said it expects growth to accelerate to 1 percent this year, 1.7 percent next year and 2.25 percent in both 2016 and 2017.

Under that scenario the public deficit will reach the 3 percent EU limit at a slightly slower pace than previously planned, falling to 3.8 percent of GDP at the end of this year and 3.0 percent next year, compared to 3.6 percent and 2.8 percent in earlier forecasts.

The government formally abandoned Hollande's commitment to balance the budget by the end of his term in 2017, envisaging a deficit of 1.3 percent of GDP in that year.

However an independent state fiscal watchdog said that while this year's growth forecast was "realistic", the 2015 forecast had "weaknesses" while projections for 2016 and 2017 were "optimistic".

The European Commission, in charge of policing member states' public finances, is expected to respond to French projections in early June after European parliamentary elections on May 25, an EU source said.