The French Government Is Not Concerned With Its Public Debt – Here’s Why

Here are the numbers: France’ public debt has reached €2,299.8 billion, the equivalent of 99% of its GDP. This debt is composed mainly of State debt (€1,828.4 billion) and social security (€211.9 billion), local regions (€199.4 billion) and central administration organisms (CNR, CEA, the Louvre museum, Météo France etc.: €60.1 billion).

Public debt keeps growing year after year since deficits – State ones being the largest – persist. But we’re stunned that the State budget keeps shrinking! For what reason? Because of zero rates, of course. Indeed, when a loan comes to maturity, the Agence France Tresor issues a loan of the same amount, but with much lower interest rates. The former loan, dating back many years, had been contracted at higher interest rates. Replacing it with a lower rate loan thus constitutes an excellent financial operation for the State!

Thus, as explained by IFRAP, basing its findings on a note from Banque de France, the charge of public debt (payment of interest), as stated in the State budget, has kept decreasing between 2011 and 2017, going from €55 billion to €42 billion. This is what has mainly contributed to the global effort of deficit reduction under François Hollande. Emmanuel Macron shall benefit from the same boost since the charge of the debt will decrease yet of another €10 billion to reach €32 billion in 2021. But afterwards, the effect will stop because all the stock will then have been renewed at low rates. 

Its’ like magic! Deficits persist, debt is increasing, but the weight of the debt in the budget is shrinking! That shouldn’t prompt governments to uphold the bar... One can easily predict they will let the situation rot until 2022 when the next presidential election takes place. Afterwards, we’ll see...

So we shouldn’t have to worry about the debt until 2022? Well, hold your horses now! 

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