PARIS, March 9 (Reuters) - France's long-term budget
planning is once again at risk of getting blown off course by
overly optimistic forecasts, with high interest rates adding new
pressure, the national audit office said on Friday.
In its annual report, the Cour des Comptes said the
government was too optimistic about its growth outlook in the
years to 2027 and too vague about plans to keep spending growth
to a minimum.
The independent public audit body has made similar
criticisms before, but it said this time public finances would
come under additional pressure if the government's borrowing
costs remained above currently planned levels.
The government's long-term budget planning does not foresee
France's 10-year benchmark bond yield above 3% before 2027, when
its current long-term budget planning ends.
However, the yield is currently above that
level on the bond market and is likely to go higher as the
European Central Bank keeps raising rates in the months to come
to fight inflation.
The audit office said if the borrowing rate remained one
percentage point above the government's expectations between now
and 2027 that would add 17 billion euros ($18 billion) to debt
servicing costs by then.
In turn, that would push the public debt burden from an
expected 111.2% of economic output this year to 113% by 2027,
the audit office calculated.
To put the public finances on a more reasonable path, the
auditor called on the government to detail plans to rein in
public spending and set financial targets in stone with a
multi-year budget planning law, which lawmakers have so far
failed to pass.
($1 = 0.9459 euros)
(Reporting by Leigh Thomas; Editing by Andrew Heavens)
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