Pave: Rules Are For Suckers, V

Le jour 228 de Sarko

I won't conduct a policy of austerity.

Jean-Pierre Raffarin,
then- French prime minister, flouting France's non-compliant
budget deficit under the Stability and Growth Pact (SGP)
LONDON February 27, 2003 (IHT)

This decision reinforces me in my pledge to take control of public spending in order to cut the deficits, in line with France's European commitments. The court's decision is a reminder that shared European constraints must be scrupulously observed by everyone.

Sarko,
then-finance minister, pronouncing pieties
after the European Court of Justice gives France
and Germany a pass on their SGP obligations
July 13, 2004 (BBC)

For me and the [EU] commission, it is important that this pact is credible and that the rules are applied in full respect of the treaty for all member states, regardless of their dimension or their economic development.

José Manuel Barroso,
President of the European Commission,
commenting on SGP scofflaws, France and Germany
December 16, 2004 (AFP)

The SGP is a fiscal treaty encumbent on EU member states in their guise as the Economic and Monetary Union (EMU), its enactment promoted -- ironically as it turns out -- by France and Germany. The SGP has, by our count, five basic provisions:

1. Grants oversight by the European Council;
   
2. Obliges a member to strive in the medium-term for a budget close to balance or in surplus;
   
3. Limits a member's budget deficit to 3% of GDP;
   
4. Limits a member's public debt to 60% of GDP;
   
5. Subjects a member to corrective and punitive measures for non-compliance, most especially an annual non-interest bearing deposit that converts to a fine if a member's defect persists. This deposit has an upper limit of 0.5% of GDP, in France's case €6.59B.

France remained in breach of her deficit obligations from 2003-2007, missing her 2005 compliance deadline. Alas, Sarko served a scant 8 months as finance minister (April 1, 2004 through November 29, 2004) and though "reinforced" did not make good on his "pledge". [Pause.] During his earlier tenure as budget minister in the cabinet of Édouard Balladur (1993-1995) he increased France's public debt and submitted two budgets forecasting a deficit equivalent to 6% of GDP, double the allowable limit under the provisions of the Maastricht Treaty, which came to be embodied in the SGP.

Which brings us to today's item.

FRANCE REAFFIRMS OBJECTIVE OF PUBLIC DEBT
OF 64.2 PCT OF GDP BY YR-END

PARIS December 28, 2007 (Forbes/AFX/Thomson Financial) - The French government has reaffirmed its objective of 'stablising' France's public debt at 'the level attained at the end of 2006', or 64.2 pct of GDP by the end of the year, according to a statement released by budget minister Eric Woerth and finance minister Christine Lagarde.

... Government plans call for trimming the debt ratio to 64 pct of GDP next year and 63.2 pct of GDP in 2009, with the aim of bringing it below the EU-mandated 60 pct level in 2012, Agence France-Presse reported earlier this month.

[Pause.] One can only wonder what excuses 2012 will bring.

France has been in breach of her public debt obligations since 2003 and does not foresee compliance before 2012. Unlike other Euro members who exceeded the SGP thresholds, France has not been fined, sanctioned, or had her public finances supervised by the European Council.

Other posts in this series not cited above can be found here, here, and here.

PFFT (What is this?): SGP? Hein? 5 | Rayonnement français 0