French to Impose Levies of 40bn Francs to Contain Deficit

September 18, 2001 - 0:0
PARIS The French Finance Ministry is to keep the 2002 budget deficit below 200 billion francs (30.5 billion euros, 28.3 billion dollars) by dipping into the finances of state-owned utilities, financial and social institutions, French newspapers reported on Monday.

The Finance Ministry, which is to unveil the 2002 budget plan today to the government, is to levy 40 billion francs not coming from taxes, raising by 20 percent to 229 billion francs from 188 billion francs in 2001 the resources coming from various state-owned institutions, French business daily ***Les Echos**** reported.

Newspaper ***Le Parisien**** reported that the annual increase in non-tax revenue for the state usually runs about 5-10 billion francs.

No one at the ministry was able to comment on the reports to AFP on Monday.

***Les Echos**** said that the "unprecedented" operation was aimed at bringing the French budget deficit under the 200-billion-franc level to 199.6 billion francs.

The newspaper also said that the ministry was to make an exceptional levy of six billion francs on state-owned electricity company EDF and two billion francs on state-owned gas company GDF, adding that the ministry has "not dared" make a similar demand to France Telecom, which is partially privatized.

The biggest contributor is to be savings group Caisse des Depots et Consignations, which is expected to provide nine billion francs in extra revenue for the Finance Ministry.

In the past the government has often levied money from semi state bodies such as France telecom or the CDC to increase state revenues but privatization has reduced the options for such funding.

Cades, a fund initially set up to pay off the country's social security debt, is expected to see its contribution rise to 18 billion francs, said ***Les Echos***.

The remaining contributions are to come from a number of social funds and bodies linked to promoting employment opportunities and social housing as well as a pension fund for self-employed manual workers.

A source close to preparation of the french budget for next year said on Sunday that French economy and Finance Minister Laurent Fabius was expected to present the government with a budget orientated towards growth of 2.5 percent.

The budget would be based on a deficit of about 200 billion francs (30.5 billion euros 28 billion dollars), which was high, but in line with the orientation of some other countries in the euro zone and might end up being smaller than the deficit for 2001.