France has reached a significant milestone as its public-sector debt crosses the three trillion euros mark, marking the first time in history, according to data presented by the statistics authority Insee on Friday. The debt surge came as a result of extensive borrowing measures implemented to mitigate the impact of the coronavirus and address the cost-of-living crises. By the end of March this year, the debt level stood at 3.01 trillion euros, equivalent to 112.5 percent of the country's annual GDP. This figure far exceeds the European Union's target of 60 percent.
The mounting debt burden and a credit downgrade from Fitch, a renowned ratings agency, have compelled Finance Minister Bruno Le Maire to pledge stringent control over public spending. By doing so, Le Maire managed to avert a similar action by Standard and Poor's this month. During a seminar dedicated to reviewing government expenditure, Le Maire disclosed that "at least 10 billion euros of savings" have already been identified, targeting areas such as the healthcare system and specific tax breaks for certain types of fuel.
Looking ahead, the government under the leadership of President Emmanuel Macron aims to reduce public debt to slightly over 108 percent of GDP by the conclusion of his second term in 2027. Additionally, they intend to bring annual deficits below the EU's target of 3.0 percent. To achieve these goals, ministers plan to phase out the support for energy bills implemented in response to Russia's invasion of Ukraine. Furthermore, they anticipate reaping the benefits of Macron's highly debated pension system reform, which raised the minimum retirement age to 64.
However, the government faces the challenge of securing resources for costly initiatives such as the energy transition and the enhancement of French defense capabilities. These endeavors necessitate careful fiscal planning and resource allocation, ensuring that the nation's financial stability remains intact amidst its pursuit of strategic objectives.
