French debt rises, amid budget strains: official data

French debt rises, amid budget strains: official data

PARIS - France's national debt rose to 91.7 percent of annual output in the first quarter of this year, official data showed on Friday amid rising concern about French public finances.

At the end of last year, the debt amounted to 90.2 percent of gross domestic product.

European Union rules require the public debt to be no more than 60 percent of output or falling towards this ratio.

But from the last quarter of last year to the end of the first quarter of 2013, the debt rose by 36.5 billion euros (S$61.1 billion) to 1.8703 trillion euros, the statistics institute INSEE said.

The debt represents the accumulation of annual public deficits, and the Socialist government is embroiled in controversy over its efforts to control the deficit for this year.

It has already acknowledged that it will miss its target of achieving the EU ceiling for a deficit of 3.0 percent of output this year, now targeting 3.7 percent.

The European Commission has given France an extra two years to reach 3.0 percent, but on condition it pursues tough structural reforms.

But the body which oversees the national accounts warned on Thursday that the deficit this year could well turn out to be 3.8-4.1 percent mainly because of weak tax revenues owing to weak growth.

The auditing body said that France would have to act quickly to reform pensions and cut social spending to contain the deficit.

The right-wing opposition has argued that tax revenues are falling badly short of target and that spending is also overshooting.

The Budget Minister Bernard Cazeneuve has said that the figures given by the opposition are incorrect, but referring on Friday to the analysis by the national accounting court, he said: "What the accounting court says is not alarmist but measured and corresponds to the reality of the situation." French President Francois Hollande said in

Brussels late on Friday that France had to "contain public spending" this year but that it was too soon to give a figure for the deficit for the whole of 2013.

If growth remained weak and the economy ended the year in slight recession, tax revenues might be less than expected, he said.

He said that some of the suggestions by the accounting court for reducing spending and tax advantages were relevant, but that reducing the inflation indexation of welfare benefits was "a sensitive subject".

This week, a member of the National Assembly, or lower house of parliament, hinted that France was in talks with the European Commission over a possible adjustment of the way the annual deficit is calculated.

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