OECD Economics Department Working Papers

ISSN :
1815-1973 (en ligne)
DOI :
10.1787/18151973
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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
 

Bringing French Public Debt Down

The Options for Fiscal Consolidation You or your institution have access to this content

Auteur(s):
Balázs Égert1
Author Affiliations
  • 1: OCDE, France

Date de publication
21 avr 2011
Bibliographic information
N°:
858
Pages
39
DOI
10.1787/5kgdpn1hhc7k-en

Cacher / Voir l'abstract

France has a track record of persistent general government deficits, partly reflecting pro-cyclical fiscal policies in upswings. This has resulted in a quadrupling of its public debt-to-GDP ratio since the 1970s to above 80% of GDP. Reducing public debt is crucial because a high level of public debt may hamper long-term growth and may have a direct impact on fiscal sustainability if long-term interest rates rise. Bringing back public debt to 60% of GDP even by 2030 would require a fiscal effort of 4 to 5 percentage points of GDP (under the assumption of unchanged long-term rates), implying permanent primary general government surpluses, which is very ambitious in view of French fiscal history since 1970. The government?s consolidation programme, which is aimed at reducing the general government deficit to 3% of GDP by 2013, represents around two-thirds of this effort. This study analyses how fiscal governance could be improved by the creation of a structural deficit rule and looks at ways the public deficit could be lowered. With France already having a very large public sector, most of the effort should be borne by holding down spending. Better control of the public wage bill, increasing public-sector efficiency and tackling age-related costs are the obvious candidates to contain expenditure. On the revenue side, there is significant potential for cutting tax expenditures. Furthermore, eliminating distortions in the tax base would encourage economic growth.
Egalement disponible en: Français
Mots-clés:
public debt, structural deficit, fiscal rule, tax revenues, healthcare, fiscal council, general government deficit, pension system, local governments, tax expenditure, government spending
Classification JEL:
  • H19: Public Economics / Structure and Scope of Government / Other
  • H21: Public Economics / Taxation, Subsidies, and Revenue / Efficiency; Optimal Taxation
  • H23: Public Economics / Taxation, Subsidies, and Revenue / Externalities; Redistributive Effects; Environmental Taxes and Subsidies
  • H24: Public Economics / Taxation, Subsidies, and Revenue / Personal Income and Other Nonbusiness Taxes and Subsidies
  • H25: Public Economics / Taxation, Subsidies, and Revenue / Business Taxes and Subsidies
  • H51: Public Economics / National Government Expenditures and Related Policies / Government Expenditures and Health
  • H54: Public Economics / National Government Expenditures and Related Policies / Infrastructures; Other Public Investment and Capital Stock
  • H55: Public Economics / National Government Expenditures and Related Policies / Social Security and Public Pensions
  • H62: Public Economics / National Budget, Deficit, and Debt / Deficit; Surplus
  • H63: Public Economics / National Budget, Deficit, and Debt / Debt; Debt Management; Sovereign Debt
  • H71: Public Economics / State and Local Government; Intergovernmental Relations / State and Local Taxation, Subsidies, and Revenue
  • H72: Public Economics / State and Local Government; Intergovernmental Relations / State and Local Budget and Expenditures