PARIS, Sept 25 - France's 2004 budget foresees economic growth of 1.7 percent and a public deficit worth 3.6 percent of gross domestic product which should then fall within EU limits in 2005, budget documents released on Thursday showed. The deficit would fall to 2.9 percent of GDP in 2005, below the three percent cap of the EU stability pact, the documents on the 2004 budget bill showed. France's budget, presented to cabinet on Thursday, includes a three percent cut in income tax, a rise in diesel tax, and it allows for no rise in public spending beyond the mechanical increase caused by estimated inflation of 1.5 percent.
The budget documents released to reporters ahead of a 1500 GMT news conference by Finance Minister Francis Mer also showed that the government says it will cut its structural deficit by 0.7 percentage points in 2004, 0.6 in 2005, 0.5 in 2006 and 0.6 in 2007. The documents showed the public deficit should drop to 2.2 percent of GDP in 2006 and 1.5 percent in 2007 -- based on a "central scenario" of 2.5 percent average annual growth over those years. The European Commission, which polices the stability pact that was designed to support the euro, is waiting for details of the budget before deciding whether to seek disciplinary action against France for breach of the pact in 2002, 2003 and 2004. Commissioner Pedro Solbes has called for the structural deficit -- the part of the deficit left when the direct impact of economic ups and downs is stripped out -- to be cut by more than the half-percentage point.//