Eurozone ministers ask France to reduce deficit

Business Materials 12 February 2008 04:46 (UTC +04:00)

( dpa )- Finance ministers from the eurozone Monday urged France to improve the state of its public finances while recognizing that the global economic slowdown might prevent Paris from fulfilling its commitment to balance the budget by 2010.

"Clearly, the council (of ministers) will have to form a view as to whether or not cyclical conditions did or did not allow member states to meet their medium-term objective (of balancing the budget) in 2010," said Luxembourg Prime Minister Jean-Claude Juncker, after chairing a long meeting in Brussels of finance ministers from the 15 European countries that share the euro.

Eurogroup ministers still piled pressure on French President Nicolas Sarkozy by urging his government to approve a "rigorous" 2008 budget, cut public spending and accelerate the pace of reforms aimed at improving the country's economic growth potential.

Eurozone finance ministers met a year ago in Berlin and vowed to balance their budgets by 2010 at the latest.

But France has since come under fire from Brussels after the new Sarkozy government said it would not reach the so-called "medium-term objective" (MTO) until 2012.

In a newspaper interview published ahead of Monday's meeting, French Economy Minister Christine Lagarde had asked her colleagues to be "realistic," saying she would be finding it "very difficult" to meet the MTO in light of the global slowdown.

After the meeting, which lasted six hours, she described the agreed text as "balanced," suggesting ministers had worked hard to find a compromise.

Growth estimates for the eurozone in 2008 have been revised down to 1.8 per cent, in the wake of the slowdown in the US economy.

Worse still, inflation soared to a high of 3.2 per cent in January due to the sustained rise in oil and food prices.

Ministers asked Italy, another eurozone member that risks missing its MTO, to accelerate its debt reduction process but congratulated the German government for balancing its budget in 2007, three years ahead of the deadline.

Monday's meeting was attended by European Central Bank Governor Jean-Claude Trichet and, unusually, European Commission chief Jose Manuel Barroso.

Ministers were due to continue talks Tuesday in a meeting extended to all 27 members of the European Union.