France could miss '09 budget deficit target

PARIS: France may exceed its budget deficit target next year if economic conditions remain weak, but the country will meet its commitment to its European partners to keep the deficit under control, Prime Minister Francois Fillon said Wednesday.

French budget plans forecast that the deficit will remain at 2.7 per cent of gross domestic product this year and next, the same level as 2007.

However, France's 2009 budget is based on a forecast of 1 per cent growth next year. The International Monetary Fund forecasts French growth of just 0.2 per cent.

``If the economic situation is difficult in 2009, there will of course a slight increase in the deficit compared to our forecasts, but there won't be any increase in public spending,'' Fillon said in an interview RTL radio.

Asked whether France would remain under Europe's 3 per cent deficit cap, Fillon said France would keep its European commitments. He noted, however, that at a meeting Sunday European leaders agreed to ``flexibly interpret'' the targets in light of the current financial crisis.