PARIS, June 26 - France aims to cut its bulging public sector deficit below the European Union limit of three percent of gross domestic product (GDP) next year, Budget Minister Alain Lambert said on Thursday. Lambert also said he was in favour of reducing income tax -- a pledge reiterated by President Jacques Chirac on Monday -- but did not say when such a tax cut could be expected. "Our aim is to be able to have a 2004 budget which brings us below three percent of GDP," Lambert said on RTL radio ahead of a parliamentary debate on the 2004 budget later on Thursday. France is under pressure from its EU partners to rein in its deficit after busting the bloc's limit last year, when its deficit reached 3.1 percent of GDP. The European Commission has said France's deficit could hit 3.7 percent in 2003 and 3.5 percent in 2004 if Paris does not take measures to put its house in order.
While aiming to cut the deficit, the centre-right government also wants to reduce taxes to foster growth amid an economic slow-down and stubbornly high unemployment, which stuck at 9.3 percent in April. Lambert said the slow-down had hit tax receipts. "Growth is not at the level we hoped for, which means it is producing fiscal receipts which are less than those we could have hoped for," he said. Prime Minister Jean-Pierre Raffarin said last Thursday the government was targeting 2003 growth of between 0.8 and 1.5 percent, after previously forecasting 1.3 percent. The chairman of the parliamentary finance committee, Pierre Mehaignerie, said in an interview with Le Figaro daily on Thursday that the government may not cut income tax next year. Lambert reiterated that the government would spend no more in 2004 than 2003.
There has been speculation that France would not be able to bring its deficit to underneath three percent of GDP next year because of the slow-down in the economy.//